Petrol should fall to £1 a litre, says RAC

Petrol should drop to £1 a litre before Christmas if retailers "do the right thing" and pass on savings from the lower oil price, the RAC has predicted.

Earlier this week, the price of Brent crude oil fell below $40 a barrel for the first time since 2009.

The RAC said there should be a 3p a litre drop for petrol prices and 5p for diesel, taking the average price to 103p and 104p respectively.

But it expects prices will be lower than this at many forecourts.

"All we need is for the supermarkets to do the right thing and embrace the season of goodwill by passing on those savings at the pump to make Christmas that much cheaper for everyone," said RAC spokesman Simon Williams.

"We are still some way off the average price of unleaded reaching the £1 a litre mark but this will be a big step in the right direction," he added.

Tesco and Asda, which ran a three-day 99.7p a litre petrol promotion last month, have already cut petrol prices by 2p per litre, while Sainsbury's said it would cut prices by "up to 2p".

According to RAC figures, the last time petrol fell below £1 a litre was in 2008.

Tumbling oil

Since June 2014, oil prices have more than halved, falling from more than $115 per barrel to under $40 on Monday.

Historically, oil cartel Opec has cut production to support prices, but so far the group has not made any changes.

On Friday, the group agreed again to maintain supply at current levels.

"If retailers don't pass on the savings quickly, they will be giving themselves an unpopular Christmas boost to profits by pocketing the extra margin when they should really be passing this on to their customers instead," Mr Williams added.