Petrol and diesel prices could go as low as 86p, says RAC

Sliding oil prices could spell good news for UK motorists, pushing forecourt petrol and diesel prices to as low as 86p a litre at the cheapest retail sites, according to the RAC.

The statement from the breakdown cover company followed a brief dip below $30 a barrel by Brent crude in Asian trading hours, and a 15% slump in oil prices so far this year that has prompted bearish calls from analysts for a drop to $20 a barrel, with Standard Chartered going as low as $10.

RAC fuel spokesman Simon Williams said: “With no apparent end in sight to the freefalling price of oil, motorists can expect some really low fuel prices in 2016."

“Breaking through the pound a litre price point for both petrol and diesel was clearly a welcome landmark, but it looks as though there is more to come. In fact we may get to a bizarre time when a litre of fuel is cheaper than a litre of some bottled waters.”

However, he cautioned that thousands of motorists are still missing out on cheaper prices as retailers fail to pass on more wholesale price savings, particularly on diesel.

“We should really be seeing diesel priced several pence cheaper than petrol on every forecourt, to the point where the average price of diesel goes below that of petrol. In many areas of the UK the price of fuel is sadly far higher than it should be: we would urge every fuel retailer to price fuel on their forecourts so that it more fairly reflects wholesale prices,” said Williams.

Still, there is a limit to how low prices can go. Fuel duty in the UK is currently at 57.95p a litre, so even if retailers made no profit, including fuel duty and VAT, the price of a litre would still be 70p.