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Petrol could become cheaper than water because of oil price crash, RAC says | |
(about 2 hours later) | |
Crashing oil prices could mean petrol becomes cheaper than bottled water, according to RAC. | Crashing oil prices could mean petrol becomes cheaper than bottled water, according to RAC. |
Brent crude, the benchmark oil price, slid below $30 a barrel on Wednesday, rattling stock markets in what has been a volatile start to the year. | Brent crude, the benchmark oil price, slid below $30 a barrel on Wednesday, rattling stock markets in what has been a volatile start to the year. |
RAC said that a further slide to $20 a barrel could mean the price of petrol comes down to 90p a litre at the cheapest forecourts such as supermarkets. | RAC said that a further slide to $20 a barrel could mean the price of petrol comes down to 90p a litre at the cheapest forecourts such as supermarkets. |
If oil falls further, to $10-a-barrel lows predicted by Standard Chartered bank, petrol and diesel could slip to 86p a litre - cheaper than a litre of bottled water. | If oil falls further, to $10-a-barrel lows predicted by Standard Chartered bank, petrol and diesel could slip to 86p a litre - cheaper than a litre of bottled water. |
Simon Williams, RAC spokesman, said there was no apparent end in sight to the freefalling price of oil. | Simon Williams, RAC spokesman, said there was no apparent end in sight to the freefalling price of oil. |
“Breaking through the pound a litre price point for both petrol and diesel was clearly a welcome landmark, but it looks as though there is more to come. In fact we may get to a bizarre time when a litre of fuel is cheaper than a litre of some bottled waters," he said. | “Breaking through the pound a litre price point for both petrol and diesel was clearly a welcome landmark, but it looks as though there is more to come. In fact we may get to a bizarre time when a litre of fuel is cheaper than a litre of some bottled waters," he said. |
Standard chartered said that oil prices will only stop falling when the market intervenes. | Standard chartered said that oil prices will only stop falling when the market intervenes. |
"In the extreme case the only definition of a floor would come when the entire market felt that prices had undershot too far. That is likely to be a very low price," Standard Chartered said, putting the floor at $10 a barrel. | "In the extreme case the only definition of a floor would come when the entire market felt that prices had undershot too far. That is likely to be a very low price," Standard Chartered said, putting the floor at $10 a barrel. |
There is a limit to how low the petrol price can go, however. Fuel duty in the UK stands at 57.95p a litre. Including VAT and fuel duty, even if the retailers didn't make any profit, the price of a litre would still be 70p. | There is a limit to how low the petrol price can go, however. Fuel duty in the UK stands at 57.95p a litre. Including VAT and fuel duty, even if the retailers didn't make any profit, the price of a litre would still be 70p. |
RAC said that there was scope for retailers to cut prices by another 5p on the average price of diesel, and warned that many are not passing on savings. | RAC said that there was scope for retailers to cut prices by another 5p on the average price of diesel, and warned that many are not passing on savings. |
“We are concerned that too few drivers are benefitting from these incredibly low oil prices as many less competitive retailers are still selling fuel at far nearer to £1.10 a litre than £1," Williams said. | “We are concerned that too few drivers are benefitting from these incredibly low oil prices as many less competitive retailers are still selling fuel at far nearer to £1.10 a litre than £1," Williams said. |
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