Filling up car at petrol station

Morrisons cut the price of unleaded petrol to below £1

Just the other day, I was at the petrol station filling up and I said to my Wife ‘I can’t believe that the price of petrol is still over £1 a litre!’. After all, if you think about it, the price of oil has fallen what, 60% or so over the last 18 months? Yet the price of unleaded fuel has only fallen around 20% in the same time frame. Well, finally there is some good news for UK motorists, in that the price of unleaded petrol is now about to fall below the £1 mark for the first time in over 6 years!

There has been a lot of speculation this week that at least one of the major supermarkets may well become the first to drop the price of unleaded to under £1, and the speculation has been confirmed this evening, as the supermarket chain Morrisons has announced that it will now be selling unleaded fuel at no more than 99.9p per litre. Other supermarkets are expected to follow suit and compete, with Asda already announcing a weekend promotion on unleaded fuel priced at just 99.7p per litre.   

As much as I’d love to get excited about the news, personally I just don’t think that these petrol price cuts go far enough. I know that a lot of people say that the amount of tax we pay on fuel in the UK is the main source of the problem when it comes to high fuel costs, but if the cost of oil has fallen by almost 60% from its peak, then I don’t understand why prices can’t come down even further.

rocket-and-feather-effect-fuelWe’ve talked about The Rocket and Feather Effect in the past on this blog, which goes some way to explaining why there may be a delay in the reduction of prices at the pump when compared to the fall in the cost oil on the financial markets. The fall in the price of oil has been evident for some time now, however, and my gut tells me that there is more room for manoeuvre when it comes to the price at the pump.

I just hope that this somewhat historic drop below £1 a litre at Morrisons will be enough to set off some kind of price war between the main supermarkets themselves, bringing pump prices down further as a result. At least we are on our way, though. Fuel prices are falling and this will be welcome news to UK consumers at such an expensive time of the year.

Do you feel that supermarkets could go further with cuts to prices at the pump?

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