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Fuel Costs: How Low is Too Low?

January 29, 2016

  • Pump prices fall below £1 for the first time in years  
  • As fuel costs plummet, concern for the planet rises
  • Is £1 a litre too low for fuel?

Empty fuel

 

With petrol prices dropping to below £1 a litre towards the end of last year, fuel costs have been hitting the headlines for all the right reasons lately. As drivers enthusiastically top up their tanks and supermarkets promise to continue lowering prices as long as the cost of oil production remains low, we’re throwing the spotlight on petrol pumps to find out what the future holds.

Last year’s demand for fuel led to concerns over diesel pumps drying up – and as prices continue to plummet, some fear that the war over fuel prices is far from over. It’s thought that motorists are set to save a huge £176 this year thanks to low cost fuel bills – but assuming prices continue to decline, we’re asking: how low is too low?

Country-wide cuts

Petrol

 

The lowered price of topping up your tank is largely down to increased crude oil production in the US, but while attractive savings offer plenty of appeal now, what does this mean for the future of fuel?

With oil prices sinking – leading to potentially catastrophic climate change – major petrol stations are feeling the pressure to keep fuel prices low, with many of them vowing to continue cutting fuel costs for as long as oil prices keep falling.

In January last year, a petrol station in Birmingham dropped its unleaded prices to 99.7p – causing chaos at the pumps. The prices at the Harvest Energy petrol station in Kings Heath saw motorists queuing to top up their tanks – with the petrol station’s owner expecting his pumps to run dry due to the demand for cheap fuel. And as similar prices are rolled out across the country, the effects remain to be seen.

Pump prices plummet

petrol infographic

 

The RAC Foundation has documented the changes in fuel prices over the years, and in the infographic above, you can see how costs have varied over the last six years. In 2010, the price for a litre of petrol was just over £1.10. 2012 saw this rocket to £1.32 before dropping slightly in 2014 to £1.30. However, just two years later in 2016, petrol prices have plunged to £1.02 a litre – and even lower in some areas.

Diesel has seen a similar trend – fluctuating from £1.12 in 2006 to just over £1.40 in 2008 before dropping to £1.06 this year. Some of the country’s big supermarkets are currently selling diesel for under £1, which is great news for many of the UK’s drivers.

Pocket vs planet

Asda fuel prices

 

In recent years, the government has attempted to encourage motorists to leave the car at home and walk more often – but with fuel prices falling, we’re more likely than ever to jump in our cars. Unsurprisingly, drivers are thrilled with the reductions in fuel – but with supermarkets like Asda and Morrisons dropping their fuel prices to under £1 a litre, what effect is filling up having on the planet?

While electric cars were once thought to be the future of driving, last year’s dip in fuel costs saw interest in electric vehicles begin to fade – with drivers rationalising that it’s just as cheap to drive a petrol or diesel powered motor while costs are low. But filling up could actually be costing you more in the long run – with studies showing that the added weight of fuel means that a full tank actually has a detrimental effect on fuel efficiency.

Around 15 percent of global manmade carbon dioxide comes from cars and other vehicles – but a decrease in fuel prices means an increase in emissions, as motorists flock to petrol stations and driving becomes more affordable. And with predictions that petrol could fall to as little as 86p a litre, how low can fuel prices actually go, and more importantly – what environmental impact will it have?

About The Author

Jon Le Roux is co-founder and company director of The Car Loan Warehouse. Being a mad engineering and motorsport enthusiast, I spend more hours than is healthy, watching, reading or talking about cars, boats, motorbikes…..basically anything with an engine.