Petrol drops below £1.45-a-litre for the first time in 18 months

There’s some light financial relief for motorists at the fuel pumps this week as petrol has dropped below £1.45-a-litre for the first time in a year and a half.

The average price of a litre of unleaded dipped to 144.64p on Monday, the lowest it’s been since early November 2021, according to the RAC.

Diesel has also slipped below £1.54 per litre, hitting 153.76p yesterday – the cheapest it’s been since February 2022.

Based on Sunday’s average UK fuel prices, the cost of a filling a 55-litre family car with petrol is now under £80 (£79.55) while a tank of diesel has reduced to below £85 (£84.57).

Since peaking at 191.5p (3 July 2022) last summer, petrol has come down by 47p-a-litre (46.86p) saving drivers £25.77 every time they brim their fuel tank (£105.32 vs £79.55). 

Diesel, which reached an all-time high of 199.09p on 25 June last year, has fallen 45.5p (45.33p) saving drivers £24.93 a tank (£109.50 vs £84.57).

Simon Williams, RAC fuel spokesman, said: ‘Seeing the price of unleaded fall back under 145p-a-litre for the first time in 18 months is good news for the country’s 19million petrol car drivers. 

‘This means it’s now nearly £26 cheaper to fill up a family-sized petrol car this summer compared to last year when a litre hit the record price of 191.5p.’

With diesel still almost 10p-a-litre pricier than petrol, Williams says this should not be the case as the wholesale price of diesel is now 4p less than unleaded.

‘Drivers of the UK’s 12million diesel cars and countless businesses who rely on it to fuel their vehicles should be paying 20p-a-litre less as its wholesale price is now 4p lower than petrol’s,’ he explained. 

With the delivered wholesale prices of both petrol and diesel at 110p and 105p-a-litre respectively, the RAC calculates that drivers should be paying no more than 142p and 137p at the pumps, even with retailer margins of 10p-a-litre.

The motoring group pointed to one independent retailer in Shropshire who is currently charging 131.9p for diesel, which is more than 22p below the UK average. 

Another small forecourt in Wales is selling both petrol and diesel for 129.9p per litre, which is up to 24p less than average prices across the country. 

‘We hope this finally embarrasses the country’s biggest retailers to cut their pump prices significantly,’ Williams said.

News of cheaper fuel prices come a day after Competition and Markets Authority  said it had found evidence that ‘fuel margins have increased across the retail market, in particular for supermarkets,’ over the past four years.

‘As a result of these increasing margins, average 2022 supermarket pump prices appear to be around 5p per litre more expensive than they would have been had their average percentage margins remained at 2019 levels,’ the CMA said.

It also has concerns about the ‘sustained higher margins on diesel compared to petrol’ so far this year, which ‘appear to have gone on longer than would be expected’.

The watchdog’s chief executive, Sarah Cardell, said they were not satisfied with evidence from supermarkets, so will be calling them for ‘formal interviews to get to the bottom of what is going on’.

In 2019, the average margins were 6.5p for every litre of petrol and 6.9p for diesel, the RAC says.

The calculation on current prices shows retail margins on unleaded are 10.8p per litre, which is around 8 per cent of the total cost of fuel.

The average margin on diesel is more than three times bigger than it was pre-pandemic, up to 22.9p per litre and accounting for 15 per cent of the total price consumers pay.

The CMA’s full report is set to be published by the beginning of July.