Could We See a 'Second Wave' of Petrol Price Cuts?
Aug 29 2020 Read 298 Times
While health experts are concerned about a ‘second wave’ of COVID-19, oil and gas analysts say round two of petrol price cuts could soon appear at forecourts across the UK. According to the AA, fears over a resurgence of coronavirus infections will drive down wholesale oil prices over the coming weeks. The savings will be passed on to motorists, with supermarket retailer Asda already starting to reduce pump prices.
“Wholesale fuel is taking a second hit from coronavirus and falling demand globally is bringing down the cost,” says AA spokesperson Luke Bosdet. “We already know Asda has started to cut its pump prices and, hopefully, others will follow.”
RAC spokesperson Simon Williams agrees, saying “If they play fair with drivers we ought to see 2p-a-litre come off the price of unleaded and nearer 4p come off diesel.”
New outbreaks spark concern
Earlier in the month, figures released by the AA showed fuel prices in the UK rose for two consecutive months, with an average increase of 3p a litre. While analysts were hoping the trend would continue, new outbreaks in countries such as Spain and Italy have sparked concerns a second wave could be imminent.
When petrol prices fell below £1 per litre earlier in the year Britain was in lockdown. As a result, motorists were unable to take advantage of the savings. This time, an AA spokesperson says British motorists “won't be locked down and locked out of the savings at the pump.” Asda is one of the first retailers to adjust pricing, with the supermarket giant trimming prices in response to oil falling by around 4% in early August.
“Asda consistently offers motorists the lowest average fuel prices nationwide week in, week out and we’ll continue to do all we can to keep fuel costs low this summer as people look to get back on the road – for work or a Great British staycation,” says Dave Tyrer, senior fuel buyer at Asda. “Motorists filling up at Asda will pay no more than 109.7p per litre on unleaded and 113.7p per litre on diesel – and whenever we can make our prices even cheaper, we do.”
Second wave could jeopardise oil industry recovery
The second wave fears come at a bad time for major oil producers, which have just started to ramp up output as the world emerges from lockdown. Concerns that countries could once again be forced to shelter in place have heightened concerns that another oversupply scenario could materialise. In April, a sonorous gap between supply and demand saw West Texas Intermediate (WTI) prices slip to negative US$37 a barrel. This represented a historic drop of around 300%.
Pricing isn’t the only change on the horizon for motorists, with fuel grades and types also transforming. To find out more don’t miss ‘What’s New for Cars: In Terms of Lubricants and Fuels.
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