RAC Cars News


Petrol Prices Set To Drop Even Further

By raccars Published

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British motorists are basking in the warm glow of the lowest petrol prices for five years, but the government is being criticised for not taking action to drive prices down even further. Chancellor George Osborne has put pressure on oil companies to pass on lower wholesale prices to customers, but meanwhile, fuel duty is at its highest for six years.

With about 70% of the price of every litre of fuel sold going to the government through fuel duty, pressure on the government is growing to cut this duty, to help lower prices at the forecourts yet further. The director of the RAC Foundation, Professor Stephen Glaister, suggests that by urging fuel companies to lower prices, the government clearly realises that the cost of fuel is too high and that it has its own part to play in rectifying the situation. While some forecourts have reduced the price of a litre of petrol to below £1, currently the national average is 106.8p per litre for petrol and 114p per litre for diesel. According to the RAC Foundation, British drivers are saving about £330 million per month as a result.

As supermarket rivalry sees the big chains dropping prices regularly, the lowest price so far has been seen at a chain of three service stations near Birmingham, whose owner set a price of 99.7p per litre for petrol. He called supermarket petrol pricing 'scandalous' and claimed he could still make a profit even by charging less than £1 per litre. The Harvest Energy chain of three service stations is owned by Dr Velautham Sarveswaran, who considers that customers are being cheated by big supermarket chains, which make huge profits from fuel sales. His businesses were swamped with customers after news of the price cut spread around.

While drivers in urban areas are benefiting from dramatic fuel price cuts, car owners in rural areas are still paying a lot more. However, legislation is being passed to ensure those living in more remote areas will also pay less for fuel. An existing government policy means that a 5 pence per litre reduction on fuel is applied to the most remote islands in the UK, but the EU is set to approve an extension, that will see 17 further areas on the mainland receive the same benefit.

Chief Treasury to the Treasury, Danny Alexander, claims that this policy is a priority for the government, which realises that for people living in remote areas, cars are not a luxury but an everyday necessity.

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