Expert Blog

Oil Prices: How 2015’s story could become 2016’s story too

Santa has made his list, he’s checked it twice, and he’s obviously very pleased with us all. Why else would he deliver an early Christmas present in the form of falling fuel prices? According to figures from the Department of Energy & Climate Change, a litre of unleaded cost around 106.97 pence at the end of November. A litre of diesel was 110.01p.

Our graph, above, should show just how low these prices are by recent standards. Unleaded is the cheapest it’s been since February and the cheapest since October 2009 before that. For diesel, the equivalent dates are August and December 2009.

And those prices should get even lower. The reason? Well, I’m afraid that it’s actually nothing to do with Father Christmas, but with the underlying cost of oil. You may remember how, at the beginning of the year, the cost of a barrel of Brent Crude fell below $50 for the first time in almost six years. It rose again in the middle of the year, bringing road fuel prices with it, but now it’s even lower. Brent Crude is currently trading at around $44. Some analysts say that $20 is a possibility.

Which means that 2016 could start as 2015 did: with general amazement at the oil price, and what it means for our wallets. Some petrol stations are already anticipating the situation by offering unleaded at under £1 a litre.

All of which is fine news for motorists of both the unleaded and diesel variety. Except there’s a grim question hovering over the pumps, and one that we’ve asked before: will George Osborne take the opportunity, when we’re all feeling a little bit better off, to raise fuel taxes? The fact that he didn’t make any promises in his recent Autumn Statement could be significant.

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