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After the last few weeks of price cuts, a lower oil price and falling wholesale costs, motoring giant the AA has announced that it thinks that fuel prices could be lower and by up to 8p a litre for both petrol and diesel, something which the RAC echoes.

Prices have been falling steadily for a month now, but the drops have slowed recently, and there is not enough movement according to AA president Edmund King, who said: “We need to see the true price of fuel reflected at the pumps.”

Just in time for Christmas

The RAC has called for it to be “Christmas at the pumps” and called retailers to cut prices by up to 8p a litre on unleaded and 6p a litre in diesel, as savings haven’t been passed along at the pumps.

Over the last month, the oil price has fallen very quickly, to lows not seen since October last year, and prices sat at approximately 118ppl for unleaded and 122ppl for diesel, compared to the current average we have of 124.1ppl and 134.5ppl for petrol and diesel respectively.

In November the average price of petrol dropped 5p, the steepest drop since January 2015, but it still seems that retailers have not passed on savings, as the RAC believes that the price should be up to 8ppl lower for unleaded and 6ppl lower for diesel. The RAC thinks that retailers need to play fair and lower prices even further, and it is even hoped that prices could fall below 120ppl for petrol, taking it back to prices we last saw in February this year.

Recent cuts

Last Friday, Asda announced a new price cap nationally of 116.7ppl and 127.7ppl for petrol and diesel respectively, bringing down the prices even further. Since the 26th October, Asda has dropped the price of unleaded fuel by 11ppl and diesel by 7ppl

Asda’s Senior Fuel Buyer, Dave Tyrer said “With Christmas just around the corner, we’re pleased we can do our bit to make our customers’ hard-earned cash go a little further. Our new national price cap of 116.7ppl on unleaded and 127.7ppl on diesel will be welcomed by the millions of drivers across the country and put money back in their pockets.”

Morrisons, Sainsburys and Tesco also matched the 2ppl price drop, all promising to cut prices at the pumps by up to 2ppl.

David Pegg, Fuel Buying Manager for Sainsbury’s, said: “As we head into December and the run up to Christmas we are committed to helping our customers live well for less, whether they’re stocking up on groceries and gifts or refuelling their cars. That’s why we’re dropping the price of both unleaded petrol and diesel by 2p per litre across every single one of our forecourts from tomorrow. Whether in-store or at the pumps, customers know they will get fantastic value with Sainsbury’s”.

Ashley Myers, Morrisons Head of Fuel, said: “With Christmas just round the corner, this saving will help many motorists afford the cost of the festive season.”

At Morrisons, if you spend over £50 in store, you can get a huge 10ppl off every litre, leading to a massive saving on your fill up.

Why the price difference between petrol and diesel?

There is currently a significant price disparity between petrol and diesel due to numerous factors. Diesel is generally more expensive at this time of year anyway as diesel and heating oil are from the same “part of the barrel” of crude oil, but the higher oil price and weakened pound mean the normally minute effect has been exaggerated drastically. The wholesale price hasn’t dropped that much for diesel until recently, and so the delay of savings being passed down to the motorist has affected all retailers.

Mark Todd, the co-founder of energyhelpline, backed up this point saying “When diesel and heating oil prices rise, energy prices tend to follow. The biggest factor that pushes up household energy prices is the price of natural gas which is up around 50% this year. No wonder we are seeing price rises right now. The biggest factor pushing up the price of diesel and heating oil is the oil price which has also been on the rise. While the oil and gas markets are not identical, they tend to follow similar patterns driven by global supply and demand and similar producers, eg. Russia, Saudi Arabia and the oil giants like Exxon and Shell. So when one goes up don’t be surprised to see the other follow.”

It looks like there will still be a disparity between petrol and diesel for the next month or so, as the slow trickle from barrel to wholesaler to the retailer can take a long time, but come Christmas we could see a drop of up to 8ppl on both petrol and diesel according to AA research.

Do you think prices should be lowered? How much would a price drop help you at Christmas? Let us know in the comments below

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