Weak Pound Holds Back Petrol Price Falls - AA

Drivers are paying 5p-a-litre less for petrol this summer, but it is "more a case of pump paradise lost than pump paradise found”, according to the AA (Other OTC: AATDF - news) .

It said that while motorists were still reaping the benefits of the plunge in world oil prices, the dive in value of the pound against the dollar since the UK's vote to leave the EU meant drivers were missing out on the cheapest summer holiday petrol for seven years.

Its fuel spokesman, Luke Bosdet, said: "The pound has lost 15% of its value compared to this time last year, down from $1.55 to $1.32.

"That is equivalent to a saving of 4p a litre, or more than £2 a tank, being lost to UK drivers.

"With (Other OTC: WWTH - news) the average petrol price already beginning to show the fall in wholesale costs last week and 111p this week, a further 4p drop would have taken the average pump price to 107p - a summer price last seen in September 2009."

The effects of currency fluctuations on UK fuel prices are limited - as fuel duty accounts for more than half the cost of a litre - but it is still a factor.

Brent crude, like sterling, also fell in value in the wake of the Brexit vote. But its 5% fall on 24 June was far less severe than the 8% tumble for the pound against the dollar.

Because Brent crude is priced in dollars, it meant the two largely cancelled each other out.

Although campaign group FairFuelUK last month accused the fuel supply chain of holding back a 3p-per-litre cut in wholesale costs.

UK fuel costs reached six-year lows early this year at a time when oil costs stood at levels not seen for 13 years - below $30 a barrel in January.

Brent remains more than 50% down on two years ago, currently trading at $43 a barrel.

Recent falls in its value, attributed to supply continuing to outstrip demand, has allowed supermarkets to start to cut petrol costs back as the shifts reach wholesale prices.

Asda said its new national price cap would bring diesel down to 106.7p per litre and unleaded down to 105.7p at all its 272 petrol stations.

Tesco (Xetra: 852647 - news) and Sainsbury (Amsterdam: SJ6.AS - news) 's later confirmed they too would be cutting prices by 2p.