Martin Lewis has issued a worrying fuel price warning to motorists across the UK. Addressing his followers on social media, he urged people to be wary of ‘price gouging’.
Price gouging is when a company takes ‘advantage of a situation in order to make a profit, usually by charging very high prices for things people need’. Mr Lewis was referring to oil prices dropping in the wake of hostilities coming to an end for the time being between Iran and the US.
That should lead to cheaper prices at the pumps, although it can often take several weeks for the drops in price to filter through. Mr Lewis said that we should start seeing a drop in prices ‘soon’.
He said: “Now is the time to watch for price gouging. It normally happens when prices drop after a peak not rise.
“Crude oil is today $73, from highs of $110. Immediately pre-war it was $67 but more normally around $60. So its not quite back to where it was yet. However that means we should be seeing petrol and diesel drop soon.”
With the Strait of Hormuz reopening after the deal was signed, this should mean that more oil tankers can pass through the strategic waterway – which carries around 20 per cent of the world’s oil. The benchmark price of oil has plunged by almost $50 a barrel since the end of hostilities.
According to the RAC, the average price of petrol rose by 20 per cent to 159.53 pence per litre at its peak in the recent conflict. Diesel hit 191.54 pence on April 25, which was a 19 per cent increase since the start of the conflict.
The delay in these drops feeding through to the pumps relates to how retailers buy their fuel.
Gordon Balmer, the executive director of the Petrol Retailers Association, said: “There are some operators who work on a daily basis, while others buy on a weekly, fortnightly or a three-week lag.”
The AA suggests that prices will continue to fall provided the deal holds. Simon Williams, the RAC’s head of policy, said: “Drivers can now expect to see the average pump price of petrol drop below 150 pence in the next week or so, while diesel should drop back under 170 pence.”
Before the conflict, petrol averaged 132 pence a litre and diesel 141 pence, according to the RAC.