Are you taking advantage of the falling diesel prices?
Thu, February 05, 2015 - 11:18:00
The fall in diesel prices accelerated in December of last year, which saw forecourts across the country gain tailbacks with the amount of people wanting to fill up their cars. The plunging wholesale price of diesel saw supermarkets especially taking advantage of the low prices.
The price of diesel fell approximately by 6.1p, on average taking the price per litre from 122.2p to 116.1p – and with more than half of the cars sold in the last five years being run on diesel, it’s no wonder there were queues at petrol stations.
These plunging wholesale prices mean lower costs for businesses that use diesel more than the average person – i.e. industries including haulage and transport, construction and agriculture. These types of companies are used to forking out on refilling their fuel tanks or refuelling their fleet of vehicles, so when the price plunged, they were quick to take advantage.
The price of diesel remains low, with the average price currently at 113.29p per litre. So for those businesses that use large quantities of diesel but are yet to take advantage of the low prices – our advice would be to get it whilst you can! Because historical data suggests that the low diesel prices won’t last forever, as they are likely to rise again.
The graph below shows that the price of diesel has been yo-yoing for years, reaching highs of 144.67p per litre in 2012 – but the overall linear trend is that the price is continuing to rise, despite the dips – and it looks like we are about to see a rise again.
Whilst the price has been low, many of us will have been stocking up, whether for commercial or domestic use, and here at CTS we have noticed an increase in enquiries for Fuel Management Systems, which would suggest that the lower diesel costs are freeing up budget which is being allocated to other things within the fuel and transport side of the business.
Farmers are also reaping the rewards of low diesel prices – with prices low, they’ll be seeing a significant reduction in their fuel costs and with drier weather towards the end of last year, cultivation of the land was easier – resulting in decreasing fuel usage and needs.
Despite all this, not everyone has been able to take advantage as much as they would have liked. Some farmers call in contractors to farm their fields, and this is where fuel prices can make things a bit tricky. A large part of many contracting agreements is fuel cost, and when prices take a dip, it’s not always easy to adjust the rates quickly – meaning that the majority of the time, farmers will pay the same price as they would when fuel prices were high. Furthermore, in instances where contractors use the farmers’ fuel to do the work, if a farmer has had their tank filled for a few months (when the price wasn’t so low), and the price of fuel suddenly takes a dip, the price of the contractor will remain the same, and therefore no saving on fuel cost has been made.