Gold Price Drop

Petrol Prices Reductions, and More are Expected

Petrol has dropped below £1 per litre at long last, and the major retailers involved in selling petrol to us are hard at it, locked in a price war, and are manoeuvring for increased sales and their share our hard earned cash. Sainsburys and Morrisons are leading the charge and Tescos are now joining in the fray. 

 

So what is the reason for the price reduction at the forecourt? The oil price per barrel has steadily been falling over the last few months. The price of crude oil has halved in three months, falling from $147 per barrel in July, to $71 per barrel this month. The last time crude was priced at $70 per barrel petrol was priced at 97 per litre, and diesel was also under £1 at that time. Diesel prices have been rising sharply recently and it is now out of kilter with petrol at £1.18 per litre. Petrol prices are likely to fall further, and diesel is likely to drop significantly, and may also fall below £1 per litre again as well which must be good news. 

 

Now that many of us are tightening our belts, the price drop is well timed. A 10p per litre price drop equates to a saving of over £500 per annum for the average two car family.   

 

The fuel price drops are also expected to help us with the cost of flights and BA and Virgin have both announced that fuel price levies will be reduced, making further savings.

 

Gold has been a commodity long associated with security during a financial crisis and indeed many people have been cashing in their savings and buying gold. This has raised the price per ounce over $10, to approx $850 per ounce. Gold price rises are a strong indicator of a weakening economy for that reason. 

 

What are the other indicators, and what should we look for? LIBOR, the rate that banks charge each other, assuming that they were lending to each other, is down a little at 6.2%. A LIBOR percentage reduction is good news, the faster the better. 

 

Another major indicator is the FTSE, which is the main index for blue chip companies. That has risen slightly, but the rise is based on fragile confidence. Generally a rise in the FTSE is a good thing.  The trend recently has been down, and sometimes catastrophic one day falls of as much as 10%. 

 

One other economic indicator is the price of wheat. At present wheat is priced at approximately £90 per tonne, and that price has fallen by about 3% over the last few days, which is good news.  These indicators show a mixed bag, so are difficult to interpret. What we do know however is that whatever the rights and wrongs of the recent recapitalisation of the major economies, there appears to be a concerted effort of their leaders to pull together. Let’s hope that that effort improves confidence and starts us on the road to economic recovery.   

 

 

 

 

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