Coronavirus: Why is the petrol price nearing £1 a litre?

The cost of petrol in the UK is approaching £1 a litre for the first time since 2016.

Some filling stations around the country have even been reported offering petrol at less than £1.

But motorists may be hard-pressed to find low deals as prices vary widely.

Why are petrol prices falling?

The key factor affecting petrol is the wholesale oil market.

Oil prices slumped in March after a price war broke out between Saudi Arabia and Russia.

How much should I expect to pay for petrol?

It varies according to which supplier you use and where you are in the country.

Supermarkets tend to offer the lowest prices, mainly because they use petrol as a loss leader.

That means they sell it cheap in the hope that once you’ve filled up, you’ll pop into the accompanying store and spend lots more cash.

So while the average cost of petrol at the end of March was 113.54p, according to the RAC, supermarket prices were as low as 104p a litre.

But prices at local garages are set according to nearby competition.

So if you only have one local garage close by with no immediate rivals, it will be able to charge more as it has, to a degree, a captive market.

That’s why prices vary even at the same supermarket chain or petrol company.

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