The latest Clay Shaw Butler Money Matters column from the Carmarthenshire Herald
The latest Clay Shaw Butler Money Matters column from the Carmarthenshire Herald.
By Mark Jones, director of Carmarthen-based Clay Shaw Butler chartered accountants and business consultants.
Whisper it, but have you noticed that the price of fuel has been coming down?
We are not quite at the magic £1 a litre mark, but we are seeing some benefits – and there are some big bonuses for diesel drivers!
Here’s a table on the average cost of fuel for petrol, diesel, super unleaded and lpg gas based on the Carmarthenshire postcode area SA31.
Unleaded Diesel Super Unleaded LPG
Max 114.9 109.9 119.9 62.9
Avg 112.3 109.1 118.9 62.9
Min 110.9 107.9 117.9 62.9
(Data provided by PetrolPrices.com on August 28, 2015)
Motorists have to hop in the ‘Back To The Future’ Delorean and drive back in time to March 2009 for the last occasion when both unleaded and diesel were under the 'golden' £1-a-litre mark.
Gordon Brown was Prime Minister and the financial crisis was crippling the world.
Crude oil was at $53 a barrel and motorists from that point on began to see fuel rise above £1, where it has stayed ever since.
On 24th March 2009, unleaded was 91.02p a litre and diesel was 99.81p a litre, according to AA data. Oil was $53 per barrel.
Today, the oil price stands at $46.
So, why haven't prices fallen below the £1 a litre mark in recent months?
Both diesel and petrol have dipped in the UK, but stand far above the £1 mark - at 112.1p and 114.6p a litre respectively, according to the RAC Foundation.
Unleaded is more than 20p a litre more than five years ago when the oil price was higher.
How much further does oil need to fall to get £1 petrol?
Oil dipped below $43 a barrel this week, the lowest it has been this year.
It begs the question: how much does oil need to fall for motorists to see a £1 litre of petrol?
Since the end of last year, experts have repeatedly said we could be heading for £1-a-litre. But petrol hasn't nudged below this constantly quoted figure.
Last week, supermarkets made another round of cuts.
Asda, which is often the cheapest nationwide for fuel, said drivers would pay no more than 109.7p per litre across its 272 filling stations for unleaded and 106.7p a litre for diesel. And this is likely to be the lowest fuel price in the country.
A large – and not so secret - factor in petrol pricing is the amount that the Government takes in fuel duty
According to the RAC, roughly 68 per cent of the pump price is tax - made up of fuel duty and VAT, currently charged at 20 per cent on both the petrol itself and the fuel duty.
Figures supplied to the motoring organisation by the Department of Energy and Climate Change show in July 2015, the average price of a litre of unleaded petrol was 116.41p.
The price per litre excluding VAT was 97.01p and the price excluding both VAT and Fuel Duty was just 39.06p.
The average price of a litre of diesel was 118.83p. The price per litre excluding VAT was 99.03p and the price excluding both VAT and Fuel Duty was 41.08p.
Fuel duty currently stands at 57.95p and VAT is charged at 20 per cent.
In March 2009, the last time fuel was below £1 a litre, fuel duty was 52.35p and VAT was 15 per cent.
If you take the price of petrol currently from the DECC figures above and apply the lower tax rates from 2009, the pump price would be 105.1p.
Extra tax is therefore adding 11.3p to the price of petrol. If fuel duty and VAT still stood at 2009 levels then we would be a lot closer to £1-a-litre petrol.
You can find out more about money matters on the new-look Clay Shaw Butler website (under our news for business section) -
We have a strong and experienced team with great local knowledge all geared-up to helping you get the very best from your finances – whether that is as an individual or as a business.
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The team at Clay Shaw Butler can be contacted on 01267 228500.
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