The impact on fuel and wider implications
The Coronavirus pandemic has forced many companies to slow or halt operations altogether, meaning many members of the public have been forced to stop working or work remotely. This has had a knock-on effect on the nation’s demand for fuel, which has decreased, but simultaneously prices at the pump are dropping.
Here, we explain the wider implications at play and what affect they are having on the price of fuel.
The global view – in the eye of the perfect storm
The price of fuel is impacted by market expectations either rising or falling in line with the socio-economic landscape globally. With many major economies locking down the movement of people this has significantly reduced the expected demand for oil, something that is a major player in determining the price of most products or commodities. It’s no surprise then that this has been a major factor in causing the price of oil to fall dramatically.
Secondly, the price is also driven by supply and how much fuel may be available. The US, Saudi Arabia and Russia are all major oil producers into the global supply chain, but a recent dispute between Saudi Arabia and Russia is driving both countries to produce more oil in a bid to maintain their revenues. This expected over-supply is adding a further, significant downward pressure on price and although there has now been an agreement to control supply, the scale of COVID-19 and its impact on demand, has continued to maintain a low oil price.
Local impact at the pump
At the forecourts closer to home, we’re already seeing the likelihood that some pump owners might not be able to survive this crisis as sales of fuel dry up and their businesses become unviable. However, those that have convenience stores onsite and can remain open will be able to compete by selling goods typically sold out in other stores or supermarkets. Due to this change in consumer demand, we are seeing a lot of forecourts holding on to their fuel prices rather than moving them with the market in the same way they normally would.
That said, UK petrol prices fell by their largest margin in 12 years during March. The price of oil was $50 a barrel at the start of the month, before dropping by 66 per cent to $22.74 at the end of March – its lowest level in 18 years. Therefore, it is key to monitor the pricing at your nearest stations, which Allstar customers can do by using our online UK Fuel Price tool, where you will find the most up to date information.
How Allstar can keep you moving and informed
At Allstar Business Solutions, we know that these are very uncertain times. Unfortunately, clarity and future predictions for fuel prices is almost impossible, and the short-term outlook is likely to change by the day. The positive news is that Allstar customers can keep up to date with the latest information in fuel price shift through our website: https://www.allstarcard.co.uk/ and be safe in the knowledge we are here to support you through this unfamiliar terrain, and will reassure you that our cards and services are experiencing no disruption.
Customers can also speak to their account managers through the usual channels through the website or by calling 0370 419 5165. Alternatively, check the fuel prices in your area by using our online UK Fuel Price tool.