Expert Blog

Diesel’s reprieve? It’s now cheaper than unleaded

Did you feel it? That moment when the world turned upside down?

It’s depicted by the graph above, which shows average fuel prices since the beginning of this year. For most of the time, diesel and unleaded have danced a familiar dance. When the price of one goes up, the price of the other goes up by a similar amount. When the price of one goes down, the other does likewise.

Until recently, that is. Since the beginning of last month, the cost of a litre of diesel has fallen precipitously. It was roughly 121p on 6 July. Now it’s closer to 115p. And unleaded just hasn’t been able to keep up. In fact, for the first time since 2001, diesel is now cheaper than the unleaded alternative. The world has been turned upside down.

How did this happen? Basically, it’s to do with a decline in wholesale diesel prices. They fell below those for standard petrol a few months ago, but only now are fuel companies transferring the savings to their forecourts. Some analysts think that there’s still more to come. They predict that pump prices will eventually reach 111p.

It’s a welcome moment of respite for diesel vehicles. As we’ve noted recently, they are being vilified for the nitrogen dioxide they emit. With prices this low, they might even start emitting more.

The question, though, is how long it can last. With the Supreme Court’s ruling still hanging above our Government, could we soon see some punitive taxes imposed on diesel? They didn’t arrive in last month’s Budget, but there are always more Budgets to come.

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