Since last December, we’ve all been enjoying the effects of falling fuel prices. We’re now at the point where a litre of fuel costs less than £1, and diesel is generally cheaper than Unleaded petrol.
It’s hard to drive past a petrol station or supermarket forecourt without noticing petrol prices at 99.9p and diesel hovering around 97.7p per litre. These tumbling costs come after significant drops in global oil prices, leaving the major supermarkets locked in a price war to pull in motorists.
The good news is that we could see prices remaining under £1 (maybe even dipping a little further) over the next month or so. However, that could all change by the time we reach mid-March and the government’s annual budget review.
A report from the Institute of Fiscal Studies states that Chancellor George Osborne will need to raise around £3billion if the government are to wipe out the budget deficit. In other words, if they want to stick to the pledge they made at the last election, they’re going to need to increase duty somewhere, and fuel prices are right in the firing line.
If the tax level of fuel rises, distributors will end up out of pocket by keeping costs to the consumer this low. Ultimately, we could end up in a situation where the price of fuel not only reaches above £1 per litre, but could also reach record highs.
The highest ever recorded costs came just after the 2012 Budget, with petrol costing 142p and diesel at 148p per litre. Hopefully any prices rises in the near future won’t be so drastic though!