CompleteCar

Fuel prices plummet

Coronavirus and Saudi-Russia spat drive down prices at the pumps.

If you're looking for a silver lining in all this, fuel prices are heading south, and are currently at the lowest level at the pumps since 2016.

€1.26 for petrol, €1.16 for diesel

According to the AA, which regularly monitors the average price at pumps across the country, the cost of a litre of petrol has fallen to 126.5c on average - a decrease of over 15c compared to last month's average price of 141.9c.

Diesel has fallen sharply, too. A litre from the black pump fell by over 16c in the past month to a current level of 116.9c.

The cause of the fall? A dramatic drop in the price of crude oil, which has fallen from slightly less than USD$65 a barrel in January to around USD$25 a barrel today.

'Some positive news'

"At a time where we're all looking for some positive news, the significant drop in pump prices is a welcome development for motorists across the country - particularly those who may be more reliant on their car currently than they ordinarily would be. As many people are facing financial uncertainty during the current Coronavirus outbreak, anything which will help reduce their outgoings is good news," Conor Faughnan, AA Director of Consumer Affairs stated. While the impact of the Coronavirus on oil prices is likely to be reversed at some point in the future, the steps being taken by Saudi Arabia are likely to have a longer-term role in affecting crude oil and pump prices. Whilst retailers across the country have dropped their prices significantly in the past month, the AA is still strongly encouraging motorists to shop around when it comes to purchasing their fuel to ensure they get the best value. With oil prices fluctuating regularly, prices at the pump could vary across different stations depending on when they purchased their current stock.

"Every day we receive high volumes of calls from people shopping around on their car insurance or their van insurance as people are well aware of how important it is to compare prices on insurance in order to ensure you get the best price. However, I'm sure a large percentage of these same people would struggle to tell you the per litre price at the station they last filled up at or how it compared to other stations in the area," Faughnan added. "Taking just a few minutes to compare these prices and being more aware of what you are paying every time you put fuel in your car could help keep some extra money in your bank account if you add up all the potential savings you could make over the course of a year of driving."

Saudi-Russia argument behind much of the drop in price

It's not just down to the fall in demand for fuel because we're all staying at home now (although that's certainly playing into it). Much of the drop in price has come about because Saudi Arabia and Russia, two of the world's biggest oil producers, had a massive falling out over how to protect oil prices, which led to the Saudis turning on the oil production tap, flooding the market, and driving down the price as a way to punish Russia, which relies on oil exports for foreign currency.

Don't expect that to last, though. Both Saudi Arabia and Russia need oil prices to remain at a steady level (somewhere between €40 and €85 a barrel) to underpin their national economies. Still, in the meantime, time to drag that V8 Mustang out of the back of the garage, eh?

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Published on March 23, 2020