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Low petrol and diesel prices throughout 2016

News   •   Jan 01, 2016 11:27 GMT

The announcement by Saudi Arabia that they have no intention of cutting production will ensure the market remains awash with low price oil.

RAC Fuel Watch spokesman Simon Williams said: “The declaration by Saudi Arabia that they have no intention of slowing down oil production in the foreseeable future suggests that motorists are in store for cheap petrol and diesel throughout 2016 with pump prices continuing to fall and likely to remain well below £1 a litre at the cheapest retailers.

“The world is awash with oil at present and the decision by the OPEC oil producing countries and particularly their biggest producer, Saudi Arabia, to continue pumping oil will ensure that this oversupply continues. Combined with significantly lower demand from China and the developing nations together with the prospect of additional supplies from Iran means that there will be no let up in cheap oil.

“While the cost of producing fuel is reducing there is, however, a limit to how far the price will drop at the pump as the lion’s share of the what we pay on the forecourt is tax. For every litre 57.95 pence goes to the Treasury in fuel duty together with VAT at 20 percent charged at the end of each transaction.  As regardless of how low the cost of fuel goes those taxes still have to be paid.

“The RAC anticipates diesel will join petrol at below £1 a litre at supermarket forecourts and cheapest fuel retailers early in the new year as a cut is overdue with the wholesale price of diesel remaining 2 pence a  litre cheaper than petrol.”