Fuel price cuts give people in the UK £5 billion boost, which is the equivalent to a 1.3 pence Income Tax cut.
People across the UK will save more than £5 billion as a result of falling fuel prices, the equivelent of a 1.3p cut in the basic rate of Income Tax cut.
That's according to new analysis from Hargreaves Lansdown, which described the situation as an "adrenaline shot delivered straight to the heart of the UK economy".
Falling fuel prices
The price of oil has fallen from $115 a barrel last summer to under $50 a barrel today. For us, that translates to petrol falling from 131 pence per litre in July 2014 to 107 pence today, its lowest level since 2009. Diesel has fallen from 136 pence per litre in July 2014 to 114 pence today.
If petrol prices fall to £1 and stay there all year, aggregate savings would increase to £7.2 billion saved each year compared to 2014, equivalent to a 1.7p drop in Income Tax.
A typical car driver could save £146 compared to 2014, which would rise to £201 a year if petrol prices stay at £1 until the end of 2015.
[SPOTLIGHT]The highest earning households could save four times more than the lowest earning, as they tend to clock up more car miles. The top fifth of households stand to save a whopping £329 a year, whereas the bottom fifth stand to save £77 a year. The average household could save an estimated £180 a year. Should the price of petrol fall to £1 per litre and stay there, this figure would rise to a £452 saving for the top fifth of households and £106 for the bottom fifth.
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Savings by region
There’s a pretty uneven spread here as driving habits around the UK are wildly varied.
Thanks to a non-stop public transport system, the average Londoner only drives 1,430 miles, so they save about £36 a year. In contrast, people in the West Midlands drive the most at about 4,155 miles a year, standing to save about £106 per person.
|
Region |
Average miles driven per person |
Savings per person |
Total regional saving/£ million |
|
North East |
3,008 |
£76 |
£200 |
|
North West |
2,948 |
£75 |
£532 |
|
Yorkshire and The Humber |
3,437 |
£87 |
£466 |
|
East Midlands |
4,155 |
£106 |
£486 |
|
West Midlands |
3,597 |
£91 |
£519 |
|
East of England |
4,045 |
£103 |
£612 |
|
London |
1,430 |
£36 |
£306 |
|
South East |
3,735 |
£95 |
£835 |
|
South West |
3,824 |
£97 |
£523 |
|
Wales |
4,044 |
£103 |
£317 |
|
Scotland |
3,603 |
£92 |
£488 |
Source: ONS. Note that these savings are per person, not per motorist, as a result of the way ONS captures this data
Bear in mind that these numbers fluctuate depending on driving habits and what kind of car you drive. For example, if you drive 20,000 miles a year in a gas guzzler which only does 25 miles to the gallon, you would be saving £770 a year.
Gas
A recent fall in gas prices has helped UK households, but not nearly as much as petrol and diesel cuts according to Hargreaves Lansdown. The firm reckons that total savings will amount to £0.5 billion, as long as current prices are maintained throughout 2015.
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Have you noticed these savings? What would you do with the extra cash? Tell us in the comments section below.
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