UK motorists clamour for price cuts in a world awash with oil

Even when oil prices are at record lows, motorist groups in the United Kingdom are still actively demanding cuts to pump prices. Since the supermarkets entered the petrol market, there has been intense competition in petrol in the UK with motorists encouraged to shop around in their local area. Today, apps are also helping drivers […]

Even when oil prices are at record lows, motorist groups in the United Kingdom are still actively demanding cuts to pump prices.

Since the supermarkets entered the petrol market, there has been intense competition in petrol in the UK with motorists encouraged to shop around in their local area. Today, apps are also helping drivers to find the best deals, day by day.

Petrol retailers are having to react daily to price changes but most will agree that motorists were lucky in the first three months of this year.

The supermarkets led petrol prices below the £1 (Dh5) a litre mark just before Christmas and kept it there until about the second week in March, despite the fact that the price of Brent crude has recovered by about 30 per cent since January.

Pressure was also put on the chancellor of the exchequer, or finance minister, George Osborne in March to freeze fuel duty that would have added 4 to 5 pence a litre at the pumps. Mr Osborne caved in to the campaign, even though it cost the UK treasury about £1.5 billion. Yet the chancellor still takes more than 70 per cent of the cost of a litre in tax.

In fact, record low oil prices are only of limited help to petrol retailers, who strike long cost-plus contracts with their fuel supplier.

Independent forecourt owners, particularly, have to keep a close watch on supermarket prices in their area because if they become too far out of step, they will lose customers for good. While margins on fuel sales hover around 3 to 4 per cent, the successful retail businesses have margins of between 20 and 30 per cent, according to industry experts.

Now pump prices are rising again, for the first time in almost a year, with the average litre costing 107.8p last week (April 21), according to the RAC. These prices are still a long way from the all-time high of 142p a litre in April 2012. Motorists may complain that prices are rising again, but they can at least take comfort from the unsuccessful Opec meeting in Qatar this month.

Forecasts that oil prices will hit US$60 per barrel before the end of the year look some way off, following the oil producers’ inability to agree to freeze output.

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Source: Business

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