Falling diesel price ‘could see highest sales since 1990’

As supermarkets drop diesel to below £1 a litre, RAC says falling price may mean highest ever sales of the fuel since 1990

The falling price of diesel fuel in the UK in recent months may have contributed to the highest sales levels for the fuel since 1990 just before Christmas, the RAC said today (January 6).

Diesel and petrol prices have fallen below £1 a litre at the pumps

Average diesel fuel prices fell by 3p a litre last month, cutting the cost of filling a tank by almost £7 compared to a year earlier, which the RAC said may have contributed to a new record sales high in December.

According to the latest government fuel statistics for November, the UK used 2.574bn litres of diesel, which is more than at any point since 1990.

And, RAC Fuel Watch — which monitors the same data that retailers use — reports that December 2015 saw drops in the wholesale price of both petrol and diesel of 2% and 3% respectively, with the wholesale price of diesel falling for the fourth consecutive month.

RAC Fuel Watch spokesman Simon Williams also said that despite falling oil prices, production in the Middle East would not be slowing, which “suggests that motorists are in store for cheap petrol and diesel throughout 2016 with pump prices continuing to fall and likely to remain well below £1 a litre at the cheapest retailers.”

Supermarkets

With oil prices tumbling by 17%, supermarket Morrisons this week cut its diesel price below a pound for the first time in six years at 99.7p a litre, while Tesco and Asda are expected to follow suit next week.

Morrisons’ petrol retail director Bryan Burger said the supermarket had cut prices a fortnight earlier than expected, marking “a moment where motorists will feel some relief after being clobbered by tax and price rises for a decade”.

According to RAC, supermarkets play a very important role in the fuel market because — despite only having 16% of all forecourt sites — they are responsible for 44% of the volume of all fuel sales.

RAC spokesman Mr Williams said: “This means their prices affect what other nearby retailers charge as well as being highly influential on the nationwide average prices of both petrol and diesel.”

Air quality

However, the news will be of concern to air quality campaigners — such as Clean Air in London’s Simon Birkett and environmental NGO ClientEarth — which have called for diesel vehicle bans in pollution-hit UK cities due to their nitrogen dioxide impact.

Just before Christmas the government also set out its plans to cut UK NO2 levels and meet EU regulations, including a number of policies — such as Clean Air Zones in five UK cities — aimed at restricting diesel buses, vans and taxis.

Nevertheless, Defra may face further court action amid claims from ClientEarth that the plan “falls short of the action necessary” to comply with EU air quality law (see AirQualityNews.com story).

The plan itself concedes that “the largest source of emissions in the areas of greatest concern are diesel vehicles”, which it states is due to “both the significant growth in vehicle numbers over the last ten years and the emissions standards not delivering the expected reductions under real world driving conditions, even before the revelations over the use of so called ‘defeat devices’”.

However, a spokeswoman for Defra today declined to comment directly on diesel prices, explaining that this is “not an issue that Defra covers”.

But, she said the department was “confident” that it had put forward “robust” plans to tackle air pollution in cities, adding that Defra would keep the air quality plan under review in order to take account of any changing circumstances.