Waiting for lower fuel prices?

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Refuel now because you will sooner see closed filling stations than lower petrol prices.

The price per barrel of oil is the lowest since the mid-1980s. Currently (mid-May) the price per barrel ranges between 20 and 30 USD. However, analysts predict a return of prices to around 50 – 55 USD per barrel in 2021. These forecasts were based, among others on optimistic assumptions that the current crisis caused by the virus will not come back to us.

 

Analysts are counting on loosening restrictions on movement, opening borders and resuming air transport, which demand for fuels is huge. In addition, OPEC and Russia have been reducing oil production by 10 million barrels per day since May, while other countries will reduce production by 5 million barrels. China’s accelerating pandemic is also expected to have a positive impact on demand.

 

Oil prices have gone down sharply, but fuel prices aren’t.

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Before coronavirus oil prices were at USD 68 per barrel. Currently the price is between 25 and 35 USD per barrel. So there was a decline of over 30 USD.

On the other hand, before crisis fuel prices were at 1.25 pound per liter.

 

Now the price of gasoline is at 1.07£, which means a decrease of 0.18 pence.

So the huge fall in oil prices is no comparable to the drop of petrol prices.

 

Why the drop is not so huge in petrol prices?

 

Although UK petrol prices fell by their largest margin in 12 years during the month, the drop is not so huge as it could be.

 

Well, for sure high petrol duties has the impact on it. Fuel duty for petrol and diesel in UK is currently 57.95 pence per litre. And this price is constance for last years.

 

Because of coronavirus shutdown many petrol stations will have to face the threat of bankruptcy. The prices drop hit their margins.  They are also currently selling much less petrol than in the beginning of the year. That is why the prices can’t be lower.

 

According to the  Department for Business, Energy & Industrial Strategy survey published in early April showed that petrol consumption was down by 75% and diesel by 71%.
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According to vin-info.com experts, the price of gasoline will remain at its current level as long as movement restrictions are maintained. After their abolition, and especially after the restoration of air traffic, we will see a mild increase in prices. 

 

As the demand for fuels increases, the price will rise, especially if the OPEC countries and Russia maintain their oil production limit.

 

 

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