Why Haven't Petrol Prices Dropped After Oil Crash?
May 28 2020 Read 238 Times
It’s no secret the COVID-19 pandemic, coupled with the recent Russia-Saudi Arabia price war, sent oil prices plummeting. Now, British motorists are scratching their heads and wondering why consumer petrol prices haven’t dropped in unison with the price of WTI and other grades of crude.
According to the RAC, petrol prices are unlikely to fall below £1 a litre, despite the unprecedented price crash that saw WTI slip into negative territory for the first time in history in April. RAC spokesman Simon Williams says the price reductions won’t be passed on to motorists as forecourts need the extra cash to stay afloat during the nationwide lockdown, which has slashed demand for petrol.
“In theory petrol prices could fall below £1 per litre if the lower wholesale costs were reflected at the pumps – but at the same time people are driving very few miles so they’re selling vastly lower quantities of petrol and diesel at the moment. This means many will be at pains not to trim their prices any further,” says Williams.
RAC warns small, independent forecourts at risk
The RAC is particularly concerned for smaller, independent petrol stations that aren’t owned by giants such as Shell, Tesco and Sainsbury’s. Forecourts in this category don’t have the same financial cushions enjoyed by petrol stations owned by industry giants which means they’re at much higher risk of collapsing during the pandemic.
“It would be bad news all round if these forecourts shut up shop for good,” warns Williams, referring to many of the independent petrol stations that serve country communities.
Lobby groups rally for price reduction
Meanwhile, lobby group FairFuelUK claims savings should be passed down to motorists and is calling for the establishment of an independent pricing watchdog to protect consumer interests. The financial impact of COVID-19 has hit Britain hard and the group says motorists deserve to enjoy at least some of the savings ushered in by the oil price crash.
“The immoral fuel supply chain has been ripping off drivers to the tune of more than £20m per day," says FairFuelUK founder, Howard Cox. “Our essential workers need honestly-priced fuel, so they are not under even more financial pressure to help us all.”
In the face of global economic uncertainty one thing is guaranteed – the future of the oil and gas sector has never been more uncertain. To find out more about the current landscape, and what’s ahead for the sector don’t miss ‘The Only Certainty is Uncertainty for Corona-Stricken Oil Industry’ with insight from experts at Koehler Instrument Company.
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