Oil prices seem to have been in relative free-fall for months, and the volatility of the markets has caused a great deal of hand-wringing in the City and elsewhere. While commentators have stressed that prices will rise over the long term, very few of them have been successfully pinned down on a time frame. In truth, the various issues affecting the oil market are complex, and predictions are difficult. That said, a couple of recent developments suggest that fuel prices may finally be set to rise. Here is a look at the possibilities.
Global Oil Prices
There was a small rise in the price of oil in February, with crude climbing to more than $33 a barrel. If sustained. this would clearly have a knock-on effect on forecourt prices for motorists. The International Energy Agency has been quick to respond and is quoted as saying that the increase was a “false dawn” and that over-supply and sluggish demand are likely to remain a major drag on prices for some time to come. Against this backdrop, it seems probable that any fuel price rises resulting from fluctuations in the international oil price will be modest.
Fuel Duty Increase?
A major think tank has said that the government’s pledge to eliminate the deficit by the end of this parliament will depend on further cuts or on tax hikes. In terms of cuts to public spending, there is little remaining “low-hanging fruit“, so tax adjustments look more likely, with an increase on fuel duty being highlighted as a possibility. The Chancellor, of course, promised to freeze fuel duty, but he could pin the increase to inflation and claim that there had been no rise in real terms. This is largely speculation at the moment, but motorists will be watching the details of the upcoming budget closely.
Fuel prices aside, though, drivers will still need their vehicles for work and leisure, and they will be on the look-out for great deals. Those needing guaranteed car finance in Portsmouth will find that firms such as www.rightdrive.co.uk can help.
As we have seen, the direction of fuel prices is hard to forecast, and consumers will be monitoring developments in the coming weeks and months. Hopefully, a clearer picture will emerge sooner rather than later.
