The first petrol station has cut the price of fuel to below the £1 barrier for the first time since 2009, after fall in global oil price. David Hunter, energy analyst at Schneider Electric, comments on whether this price drop will be an outlier or the rule.
David Hunter, energy analyst at Schneider Electric:
“Whilst the recent commodity price falls take us closer to the £1 barrier, for the time being, prices below the pound will be the outlier rather than the rule. If oil remains at $50 and the dollar exchange rate is stable, I would expect average unleaded prices to fall to something like £1.03-£1.04 per litre. For us to reach the hallowed ground below the pound it would take Brent levels sticking at around $42-$43/barrel. Whilst this isn’t unfeasible, we’re a little way off yet.
“Consumers waiting for falls to fill their tanks need to be conscious that there’s always a time delay between movements in the unrefined crude oil market and changes to prices at the pumps. The crude has to be sold, transported to a refinery, refined and distributed to the retailer before the price effect can be seen. Even then it can be impacted by high-stocks, demand constraints and fluctuations in the exchange rate.
“Ahead of the general election the impact of duties on fuel costs will be heavily scrutinised by consumers. As commodity price falls, the duty cost remains unchanged, resulting in those charges making up a larger proportion of the pump price. In July the tax and duty mix accounted for around 60 per cent of the total petrol price, now it’s knocking on the door of 70 per cent.”
About Schneider Electric
As a global specialist in energy management with operations in more than 100 countries, Schneider Electric offers integrated solutions across multiple market segments, including leadership positions in energy and infrastructure, industrial processes, building automation, and data centers/networks, as well as a broad presence in residential applications. Focused on making energy safe, reliable, and efficient, the company’s 150,000 plus employees achieved sales of 24 billion Euros in 2013, through an active commitment to help individuals and organisations “Make the most of their energy.” www.schneider-electric.com
