PETROL prices could fall by as much as 10p a litre once Donald Trump takes office as the President-elect promises a massive boost to oil production, analysts have claimed.
President Trump is reportedly set to approve increased drilling in US waters and more export permits for liquified natural gas once he enters the White House.
The price of petrol in the UK is determined by a number of factors, including fuel taxes and profit margins for retailers.
But the single largest influence is the price of crude oil, the natural resource from which fuel is made, on the global market.
Experts have suggested that President Trump’s so-called “drill baby, drill” approach could see an increase in international supply of oil, placing downward pressure on prices.
During his campaign, the incoming President said: “Starting on Day 1, I will approve new drilling, new pipelines, new refiners, new power plants, new reactors, and we will slash the red tape.”
The latest forecasts following his seismic election win in November have oil dropping to just around £47 ($60) per barrel, which could have a drastic impact at the pumps.
Simon Williams of the RAC said: “If oil was to trade consistently around $60 a barrel next year and the sterling-to-dollar exchange rate remains where it is now, drivers should see petrol and diesel prices come down by at least 10p a litre.
“This would mean unleaded dropping to around 126p – a price last seen on forecourts in early 2021 – and diesel falling to 132p.
“This would equate to a saving of £5.50 when completely filling up an average family car.”
And not only could this directly benefit Brits, but it could also have a knock-on effect across the economy.
Lower fuel prices significantly reduce the costs for commercial and industrial freight traffic which, in turn, slashes the price of goods.
This is great for holding down inflation and stimulating growth, with lower prices helping to drum up demand and boost the amount of spending on the high street.
Paul Dales, chief UK economist for Capital Economics, has suggested that a drop of just £7.96 ($10) per barrel in the price of oil could bring down UK inflation by 0.1%.
It comes after the announcement that President Trump would make history with a second UK state visit, set to be hosted by the King.
