The AA and RAC are both predicting that prices at the pumps will fall in the run-up to Christmas, and could hit a new low for the year.
However, while the RAC says it is likely the most price-conscious retailers may dip below £1 per litre, the AA says prospects “of fuel at £1 a litre still remains very doubtful, unless used only as a marketing gimmick”.
The RAC bases its predictions on the falling price of oil, with a barrel falling to $40.40 on Monday – its lowest price since February 2009 – although it rallied slightly on Tuesday finishing at $41.56.
RAC fuel spokesman Simon Williams said: “Events in Paris made oil traders react on Monday causing a sudden dip in the price of Brent crude to the $40 mark which has not been seen for more than six years. With oil prices already consistently low as a result of too much supply, the dip – even though it will be temporary – should still be reflected in wholesale prices, making fuel cheaper for motorists.
“After a summer of lower forecourt prices, motorists are now looking forward to the prospect of yet lower petrol and diesel in the run-up to the expensive festive period. While we are a way off average petrol prices reaching £1 per litre, there is a good chance the most price-competitive fuel retailers will take the plunge.”
The AA said the wholesale price of petrol had fallen more than 2ppl over the past 10 days, but this had yet to be reflected at the pumps.
AA president Edmund King said: “It would be a good start to the run-up to Christmas if petrol prices fell to a new low for the year. However, this year’s lower pump prices have failed to reinvigorate pump sales in the UK – unlike in the US.
“That extra American demand boosted refining margins through the summer and these remain ‘robust despite high product stocks’, according to the International Energy Agency.
“Although the price of oil is back into the low $40s, a surge to $50 a barrel a fortnight ago (based on a five-month-old report from China’s central bank) illustrates the continued volatility in the market. In short, UK drivers should make the most of lower pump prices while they last.”
Both motoring organisations said the greatest threat of increased fuel prices was from the Chancellor’s autumn statement on Wednesday November 25, and they urged him not to take advantage of the relatively low prices to load on more tax.