Will the price of Diesel continue to fall?
December 2022 finally saw the price of a litre of diesel fall by around 9p/litre, down to an average of 174p/litre, but wholesale prices have fallen much further in relation to prices 3 months ago.
The price of wholesale diesel is roughly the same now as it was back at the beginning of March 2022, when the retail price of a litre of diesel was just 151.67p/litre, which is 23p lower than it is now.
The RAC Price watch states that the average diesel price/litre should in fact be around 14p cheaper than it currently is, but only a hand full of retailers are selling diesel at anything close to this price. Retailers are being accused of “rocket and feather” pricing, which is where the retail price rises rapidly with the wholesale cost but falls slowly as the wholesale cost falls.
Brent crude oil had recently been trading as low as $75/barrel, but the worldwide demand for oil is increasing and prices are currently rising, especially with China now opening its borders, the price on 9th January 2022 was $79.65 per barrel. The concern now for diesel users is that the price of crude oil per barrel will begin to rise again. Goldman Sachs is currently estimating a likely price for Brent crude oil of $105/barrel by the end of 2023, 30% more than it is now since global demand is expected to rise. This would mean similar pricing for diesel to that in March-June 2022 when the price per litre for diesel was £1.80/ litre climbing to a maximum of £1.99/litre on 1st July 2022.
With the 5p/litre Government duty expected to be added back on at the end of March 2023 and possible future price hikes expected companies need to do all that they can now to maximise the efficiency of their fleet operations, businesses must do everything within their power to control costs. This includes using vehicle telematics to enhance driver behaviour and vehicle performance as well as optimising delivery routes to ensure that each delivery is made over the shortest distance possible while using the least amount of fuel possible.
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Descartes Fleet Software solutions will improve delivery density, guarantee that deliveries are completed on time and in full on the first visit, eliminating the expensive need for a second visit, and optimising the delivery order and the route used in order to reduce the miles per delivery.
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