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The price of oil fell below the $100 a barrel mark on Friday for the first time since last October, but a weaker pound means drivers won’t save a penny at the pumps.
A barrel of Brent crude fell to $98, down from $120 a barrel last month.
The 2p saving drivers should see at the pumps as a result of lower oil prices, however, has been 'knocked out' because the pound has fallen in value by 4% since the middle of May, the AA explained.
'Had the pound remained worth $1.61 instead of around $1.53 now, further falls in the NW Europe wholesale price of petrol (taking it below $1000 a tonne for the first time since January) would have saved drivers a further 2p a litre,' the AA said.
Meanwhile, retailers have also yet to pass on the full 10p a litre saving from previous falls in wholesale prices to drivers.
Drivers have seen a saving of just seven and a half pence per litre at the pumps, Luke Bosdet of the AA explained. So while a weaker pound means they will not benefit from the most recent drop in wholesale prices, they are still owed a two and a half pence saving from the wholesale price falls seen since mid-April.
Yesterday the average price of petrol in the UK stood at 134.92p a litre, down from the record high of 142.8p seen in April. The cost of diesel, meanwhile, has fallen from 147.93p to 140.52p.
Earlier this week, the government warned fuel companies that they were being given 'one last chance' to improve transparency in the market.
Retailers have long been accused of responding to increases in wholesale prices much more quickly than price falls – prices shoot up like a rocket and fall like a feather, said Bosdet.
Transport secretary Justine Greening has now ordered retailers to set up a code of practice that allows drivers to monitor changes in petrol and diesel prices. If they don't, the government has said it will implement legislation.
Retailers claim that the industry does not understand the complex pricing mechanism, said Bosdet. Yet this fall in the price of oil is a perfect example of why greater transparency in the market would benefit suppliers as well as drivers.
On the one hand transparency would show drivers that a quarter of the savings from the original fall in wholesale prices was yet to be reflected at the pump, while on the other retailers and suppliers accused of pocketing the benefits of falling oil prices, would be able to defend themselves as to why a weaker pound means there will be no added savings.
Comments (22)
A good example of how our world is mostly based on GREED and not NEED
16:07 on 01 June 2012
We all know that the price of petrol is manipulated by the cartel of oil companies. Because the government is scared of doing a single thing to irritate them the motorist gets hit all the time. It is pathetic.
16:10 on 01 June 2012
The fall in the price of oil still has some way to go yet , eventually the price at the pumps price will overtake any weakness in the pound, which itself might even strengthen on the back of cheaper energy bills for industry.
16:40 on 01 June 2012
We need this greater transparency the retailers or Oil companies are taking us for a ride. When oil was a little less per barrel than it is now we were paying £1 per ltr. so, regardless of the weakness of the pound, are we now paying so bloody much??
17:46 on 01 June 2012
This stuff about exchange rates is a typical corporate/financial services scam/mis-information. Here are the facts - available to anyone. On March 8th this year the US dollar bought about 63.6 pence. On May 29th it bought 64.5 pence. On the same dates a barrel of Brent was about $120 US and $100 US. Do the conversions and you will see that in UK terms the price of oil has fallen by 17%. And the cost of petrol? - down about 5%. Petrol retailers have always screwed us and I guess they always will
18:30 on 01 June 2012
i understand from recent comments on TV, that there is now a panel set up to watch the relationship between oil and petrol prices. Any significant fall in oil prices should show up at the pumps in approx 14 days, as higher priced stocks are used up
19:05 on 01 June 2012
Keith, if the gov't was scared of oil companies why did they put an extra tax on North Sea actvities which had the effect of curtailing exploration?
19:12 on 01 June 2012
I'm very glad to hear that people are becoming more aware of the issue that when oil price decreases, fuel prices at the pumps remain virtually static. Yet when the oil price increases, fuel prices at the pumps increase so fast, they nearly hit the sun!! We need to become more active if we are to subvert the greedy ******** who have been exploiting people for years! As the old adage goes...ACTIONS SPEAK LOUDER THAN WORDS!
19:20 on 01 June 2012
Victoria needs to do her sums better. Since March 8th the price per barrel has fallen by 17% in sterling terms. That means petrol should now be about 116p/litre
19:32 on 01 June 2012
I hope this doesn't degenerate into a "let's boycot all Shell or BP garages campaign" again. The problem with the oil industry is that it's divided into four major sectors ie exploration, extraction, refining and retailing and all the big companies are involved in various stages of the game and intertrade with each other. This even goes down to your local BP station which might be selling BP fuel one week then Texaco etc depending on whose doing what with the futures market and what refining capacity is available (one was closed last week in the UK). Don't be deceived into thinking that you understand what's going on, it's not as simple as greed.
19:49 on 01 June 2012
Okay Dennis then explain why petrol prices shoot up immediately the price of oil increases and comes down so slowly (or hardly at all) when the price of oil drops. It works both ways or at least it should. When the price goes up we are effectively been charged those higher prices on lower priced stocks. If there is a 14 day delay allowed before prices are to come down then it should be the other way to - but it isnt.
22:18 on 01 June 2012
Dennis, oil is physically the same as it was 1, 2, 10, 20, 30 or 1000 years ago. Nothing has changed but the price and the increase isn't entirely inflation so someone is being greedy somewhere!
22:56 on 01 June 2012
Mark, I agree however, my point is that attempts to embargo certain petrol brands doesn't work because of the reasons I have given ie BP stations don't necessarily sell BP fuel. You should also remember that oil is priced in dollars and according to todays FT although the price is now sub $100/b the £/dollar exchange rate is cancelling out the price drop.
Ryan, it's true that oil is physically the same as it was (that goes for the whole periodic table apart from radioactive elements!) costs of a commodity are based on demand, extraction costs, distribution, geopolitics and refining costs. Everyone is greedy but the market (if open) provides a stabilising mechanism. Perhaps the fact that some supermarkets are offering up to 12p/litre off is telling us something since petrol margins are not normally that high.
Incidentally my son works in Australia and there the petrol price goes up at weekends.
23:16 on 01 June 2012
Mark, I believe that smaller garages buy a tanker load of fuel and pay the tax up front. They can only change the price down when the next load comes in (if it's cheaper). Bigger garages should be more responsive.
23:20 on 01 June 2012
Now if the governor had discharged his mandate, and not acted as the a*** licking lap dog of them 2 miles or so west of him, there would have been a fall in the price petrol etc.
Time for them in that 'palace' (*h**ehouse more like it) on the Thames and the edifice in Threadneedle street to step up to the plate and protect us from counterfeiting and adulteration of the currency and the savings of the and protect the value of our currency.
Currently they are sc***ing everyone (except themselves) in sight. As for the opposition, they were mostly responsible and are now playing the holier than thou card. Reality is that if they applied the morals they require, probably 75% of their front bench would have done time and been disqualified from holding office, But does Red Ed apply the same yardstick? Not by an exceedingly long (maybe 5 miles long) piece of chalk. Was it not one of their own who called an honestly concerned woman a bigot, and that, together with mendacious hypocrisy also applies to them.
Yes many will suffer, but the vast majority, who were prudent, will benefit.
Does not the bible say ( and words of wisdom) first take the splinter from out thine own eye before you remove one from thy neighbours eye (or words to the effect)?
23:43 on 01 June 2012
Snoekie, Who was it that said if you want to hear a good argument against democracy spend a few minutes talking to the average voter?
00:26 on 02 June 2012
look to Australia,where we have two companies ,COLES and WOOLWORTH controlling the fuel prices despite clear legislation preventing them from doing so. Our fuel prices are slightly lower than the UK but the present government has a policy of forcing commodity prices up to bring about climate change. A result of their coalition with the greens party.
Our pricing appears to mirror the UK's in that the oil price may drop but the pump price increases.
It is time the consumer in the western world awoke to this and questioned the policy makers who are responsible for this and just what is their long term strategy for our economic well being.
Western governments appear to be rather quiet on this ,is it because there is no strategy or is it because they have no idea? In Australias labor case,the latter would appear to be true,unfortunately.
00:30 on 02 June 2012
Anonymous 1,
I can see why smaller retailers have to use up their most expensive stock and wait until then before putting up the price causing a delay.
This still does not explain why the reaction the other way is not the same.
As I said before they are using any increase in oil prices as an excuse to charge us more for fuel that they bought before the increase.
09:28 on 02 June 2012
I think you can guarantee that Osborne will impose his 3p per litre increase in duty in August, he hopes this fall in price will conceal his extra tax. I don't understand why people always have a go at the oil companies. Just think of what they do to find oil, refine it, transport it & retail it! What does our government do to justify their 65% (or there abouts) tax take?
12:09 on 02 June 2012
Yes, the government take a MASSIVE cut from tax but who is it that puts the pump price up when the cost per barrel goes up- it's the oil company (and it happens overnight). However, when the price of oil drops they do not drop the price overnight and results in the motorist getting robbed yet again.
I know the Government won't do anything about this because it's not in their interest despite high fuel prices causing inflation to rise (way above their prediction). Is this corruption or greed (or both)?
15:35 on 02 June 2012
"Is this corruption or greed (or both)?" or perhaps the need to support a bloated public sector.
21:26 on 02 June 2012
Most of the commentators here are aiming at the wrong target,and no I am no fan of the oil companies.Its this and previous governments trying to distract the man in the street from the real thief, the greedy chancellor of the exchequer.
You never see the government reducing the tax take on fuel when prices are high,what ever happened to cameron/osbornes fuel stabaliser scheme.
These idiots have lost the plot, and as for labour its not worth listening to a word they say.
16:58 on 03 June 2012
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