The convenience of driving has meant that fuel is now an essential cost for many of us to factor into our day-to-day spending. But the price of fuel can be extremely hard to predict. According to the latest figures from the RAC, the average cost of fuel hit a six year low in August. Diesel fell by 5p a litre to 110p, and unleaded dropped 4p to 112p a litre during the course of the month. As a result of this, the cost of filling up a car with petrol was £2 cheaper than it was in July.
Why did prices fall?
In the last few weeks of July, oil was consistently averaging at $60 (£40) a barrel. But this then went on to fall under $50 (£33) before reaching a low point of $41.87 (£27) by the end of August. The world oil prices are currently believed to be at their lowest since February 2009.
Diesel drivers are thought to have been the most to benefit from these low prices, thanks to a new supply of diesel from Saudi Arabia bringing down the wholesale price. Because of this, drivers are paying £5.60 less to fill up their cars than they were at the beginning of July. Petrol motorists are only just seeing the benefits of this price decrease, with the drop in the price of oil feeding into lower wholesale and retail prices.
How will this affect me?
Although fuel prices are currently cheaper than they have been, this price dip is not expected to last. This is because the Organisation of the Petroleum Exporting Countries (OPEC) – who produces 40% of the world’s oil – have agreed to meet and discuss a ‘fairer’ price for oil with other producers. Even in the first week of September, oil prices started to rise – with a barrel being traded for around $48. In spite of this though, the RAC insist that you shouldn’t be too concerned that prices will return to the highs seen in April 2012 (petrol 142p a litre, diesel 147p) any time soon.
With the price of fuel being so changeable, it can be hard to know how to factor this cost into your monthly budget. But generally, it’s better to overestimate what you’re going to spend on fuel than under-budget and leave yourself short. Working out the average that you spend on fuel every month should help you to come up with this figure.
There are a few things that you can do to decrease the cost of fuel – the first being to shop around for the cheapest prices. The app WhatGas provides you with details of the nearest petrol stations and how much they charge for fuel, or you could use the site PetrolPrices. Making sure your car is as fuel-efficient as possible will stop you from having to fill up your tank so much as well – you can read more about this here.