The RAC has reported that the price of petrol has dropped to its lowest in 3 years. The average price for a litre of unleaded currently costs around £1.35, compared to £1.92 in July 2022 when Russia’s invasion of Ukraine sent prices surging. The drop has been attributed to a strong pound, thanks to falling inflation, and lower oil prices (currently at about $75 per barrel) across the globe and is expected to continue in the coming months as the price at the pumps adjusts to reflect lower wholesale costs. Fuel spokesman Simon Williams said that depending on where drivers were filling up, they could soon be paying as little as £1.26 for a litre of unleaded, with the cost of refuelling the average family car coming in under £70. Diesel is priced a little higher but has still fallen considerably to £1.41 per litre according to the Competition and Markets Authority (CMA).

The CMA has been looking into the sector due to concerns over fuel prices. In July they claimed that weakened competition had resulted in supermarkets’ profit margins doubling since 2019. This reflects RAC's criticisms of retailers for not dropping prices at the same rate as wholesale costs.  While the falling prices will be a relief for motorists, the Petrol Retailers Association (PRA) has bemoaned the ‘pressure’ independent forecourts are facing and that the price drop doesn’t reflect higher labour and energy costs or reduced sales.

Russia remains the world’s third largest oil exporter. Following the country's invasion of Ukraine, many Western countries imposed sanctions against imports, increasing the demand from other countries which resulted in prices soaring. At one point the average cost was $139 per barrel, the highest in over a decade. The UK plans to phase out Russian oil and currently only imports around 6% of its oil supply from the Russians.

(Sources: bbc.co.uk)