Falling petrol prices boost UK consumers

THE era of falling petrol prices will last well into 2015, helping to deliver lower inflation and higher real incomes for British consumers.

The International Energy Agency has forecast that the combination of the American oil and shale gas boom together with weak demand from Asia and the eurozone will keep the price for Brent crude below $80-abarrel well into the new year.

The price of Brent crude has tumbled 30pc to $77.92-a-barrel since mid- June and motorists, airline passengers and manufacturers should all see the benefits.

As gas prices tend to shadow those of oil the continued weakness in wholesale energy markets should assist in moderating heating bills this winter.

The main cloud on the horizon is a meeting of the OPEC oil producers in Vienna later this month where some experts expect the Middle East’s biggest producer Saudi Arabia to cut-off supplies.

But with several of the OPEC cartel currently facing political turmoil, oil market experts question whether an agreement could even be reached.

It is thought Saudi Arabia has continued to pump oil at record rates as part of an informal arrangement with the US and other Western governments to keep oil flowing at a time when a widening war is being raged against Islamic State. In the past, conflict in the Middle East generally has led to a run up in the oil price.

The IEA noted yesterday: ‘It is increasingly clear that we have begun a new chapter in the history of oil markets.’

The biggest change is the reemergence of the US as a major oil and gas producer, bordering on selfsufficiency. Ironically, the fall in the oil price could slow that process by making fracking, which can be relatively expensive, less economic over the short-term.

Brent crude has fallen for eight weeks in a row – its longest continuing fall for eight years, according to Reuters data.