Oil Prices Fall: A-Level Business in the News

Have a go at this teaching activity, which includes a downloadable worksheet and suggested answers.

What's the story?

Chancellor may consider reversing fuel duty cut due to recent drop in pump prices.

The recent decline in oil prices could lead to lower fuel costs at the pump, but this potential benefit might be short-lived due to possible government actions. Brent crude prices have fallen below $70 per barrel, reaching levels not seen since late 2021. This drop is attributed to reduced demand and potential oversupply in the oil market.

Despite the decrease in oil prices, there's been criticism that fuel retailers haven't fully passed on these savings to consumers. Motoring groups argue that wholesale fuel prices have been slow to reflect the oil price decline. However, recent regulatory pressure has narrowed the gap between wholesale costs and pump prices.

In the upcoming budget on October 30th, Chancellor Rachel Reeves is facing pressure to address a significant deficit in public finances. One potential solution being considered is to reverse the 5p-per-litre fuel duty cut implemented by the previous government in 2022.

This decision could have significant implications for drivers, particularly those on lower incomes. The AA has warned that removing the duty cut could disproportionately affect millions of drivers who are already struggling with their budgets. There are concerns that such a move could push fuel prices back up to around 150p per litre or more when combined with current market conditions.

The Treasury has not confirmed any specific plans regarding fuel duty, but there are indications that wealthier individuals may face increased taxes.

Oil prices fall