Fill up while its cheap! Petrol prices fell to a four-year low in May – but a hike at the pumps is now on its way
- Unleaded dropped below 106p-a-litre on average in May, with some supermarkets still selling petrol for £1-a-litre
- Sixteen weeks of falling pump prices has come to an end at the start of June
- With oil prices starting to recover, wholesale costs are increasing for retailers
- AA and RAC warned drivers it won’t be long before increases come to forecourts
Motorists have been able to enjoy super-low fuel prices in May, paying less than £1 for a litre of petrol at supermarkets in recent weeks – but this is all set to come to an end, experts warn.
The average price a litre of unleaded petrol fell below the 106p mark last month for the first time in more than four years.
But both the RAC and AA said motorists need to brace themselves for forecourt prices to rise in June, with drivers urged to fill their tanks now while costs are low.
Time to fill up: The 16 weeks of consistently decreasing petrol prices has ended, according to experts
The price of unleaded fell to a UK average low last month of 105.81p on 21 May, having started the month more than 3p-a-litre more expensive, according to the RAC Fuel Watch report.
This made refilling a 55-litre family-size petrol car around £1 less expensive than at the end of April, on average.
Diesel also fell more than 3p-a-litre, though being more expensive meant the same size car would be £1.39 less expensive to brim.
Motorists were best placed to fill up at supermarkets, with Tesco, Morrisons and Asda all selling unleaded for around £1 per litre during the month having dropped prices on 11 May – while the cheapest diesel can be found for 104.7p at Asda and Morrisons.
However, analysis by the AA this week showed that the place to locate £1-a-litre unleaded was principally in towns and cities that had an Asda fuel presence, and said pump prices across a town can still vary by as much as 10p-a-litre – more than £5 a tank.
The price of a oil rose by 83% from the start to the end of May, pushing wholesale costs higher and – soon – increase the price at forecourts
This abrupt end to months of falling prices is a result of a rebound in the world oil price, which was up $15.59 in the month to end May at $34.44 a barrel (an 83 per cent increase), wholesale petrol prices rose by 7p during the course of the month, with diesel up 4.5p.
The AA says that means the crash in pump prices – which lopped nearly 22p off a litre of petrol over a period of 16 weeks – is over, with retailers expected to pass on these additional costs fairly rapidly to the nation’s motorists.
Simon Williams, fuel spokesman for the RAC, said: ‘How long these lower pump prices remain for is debatable and is largely dependent on events taking place thousands of miles away from the UK.
‘The impact of the coronavirus on world travel and economic activity has dramatically reduced the global demand for oil, which is forcing major oil producing nations such as Saudi Arabia and Russia to desperately agree production cuts to shore up the barrel price.
‘How far they go with these cuts, and how quickly, will be crucial in determining what happens with prices at the pumps over the next few months.’
He warned that as oil prices begins to creep up, a rise in the cost of filling up is ‘almost inevitable’.
He added: ‘For now, drivers should fill up when they can to benefit from what are the lowest prices for four years.
‘While the impact of the coronavirus is set to be with us for a long while yet, we don’t expect such low pump prices to be.’
Both the AA and RAC urged motorists to fill up now while fuel remains relatively low, as prices are set to rise in June
The AA says that average petrol prices are already rising to around 108p per litre at the start of the month and across the UK, average price differences between nations and regions are returning to pre-lockdown levels.
Petrol and diesel in the most rural parts of the UK remain nearly £2.50 a tank cheaper than in the most populated area with the biggest concentration of fuel stations, it said.
‘Supermarkets remain the go-to places for much cheaper fuel prices in a town although the £1 a litre won’t be around for much longer,’ commented Luke Bosdet, the AA’s fuel price spokesman.
‘With car trips back up to between 70 per cent and 80 per cent of pre-lockdown, blaming lower fuel sales volumes for huge mark-ups on pump prices is now wearing thin.’