Fleet News

Early Christmas cheer for fleets as diesel drops below £1

Fleets were given an early Christmas present last week when the price of diesel fell below £1 a litre for the first time in 14 months.

The dramatic fall in pump prices was given a further boost after the supermarket chain Morrisons started a fuel price war among the supermarket giants.

The pressure on other fuel retailers to follow suit and cut their pump prices increased when Morrisons slashed almost 5p off a litre of diesel overnight.

The drop in prices means fleets will not be so badly affected by the chancellor’s move in the pre-Budget report to add 2p to fuel duty, which came into force at the beginning of the month.

The latest move by the supermarket chain means it has now reduced what it charges for a litre off diesel by 34p since July – cutting the cost of filling an average fleet car by more than £18.

The move takes Morrisons diesel price to their lowest level since November 2007.

Marc Bolland, chief executive at Morrisons, said: “Morrisons is taking the lead again in helping motorists.

"This time, we’re the first in the UK to sell diesel for less than £1 a litre.

"We are absolutely committed to giving the strongest value for our growing number of customers.”

It is the thirteenth time in just six months that prices have fallen after BP, Sainsbury's, Tesco and Total quickly followed Morrison’s lead by reducing their diesel prices, taking them to 99.9p at many sites.

The latest price cut brings a welcome respite for fleets after diesel prices soared dramatically during the summer reaching an all-time high of £1.33 in July.

The reduction should see some larger fleets slash thousands off their monthly fuel spend.

When prices surged in the summer a typical fleet of 200 diesel cars averaging 40mpg over 2,000 miles a month were paying £299 a month per car or £59,800 a month to fuel the entire fleet.

Now, with diesel prices falling back to 2007 levels, the same fleet has seen its monthly fuel costs fall by £14,800.

And all indications are that, with oil prices continue to fall on the world markets, the price fleets pay at the pumps will remain below £1 a litre.

Analysts blame the global recession for the decline in demand for oil, which in turn is driving the fall in prices.

America’s energy department said recently that demand for oil will fall throughout this year and next.

“The increasing likelihood of a prolonged global economic downturn continues to dominate market perceptions, putting downward pressure on oil prices,” it said.

In addition, the World Bank predicts the cost of a barrel of oil will fall to $75 before prices begin to recover in 2011.

This means the price of a litre of diesel at the pumps could fall even further.

Essential fuel information:

Average UK prices

Prices in your region

How much will petrol and diesel cost your company?
 

Leave a comment for your chance to win £20 of John Lewis vouchers.

Every issue of Fleet News the editor picks his favourite comment from the past two weeks – get involved for your chance to appear in print and win!

Login to comment

Comments

No comments have been made yet.

Compare costs of your company cars

Looking to acquire new vehicles? Check how much they'll cost to run with our Car Running Cost calculator.

What is your BIK car tax liability?

The Fleet News car tax calculator lets you work out tax costs for both employer and employee