Russell Lynch: £1-a-litre petrol may be far off as oil firms take fatter margins

Those of us facing a long drive over the Christmas break — and I’m one of the them — could do with some good news at the petrol pump.

Unfortunately, it’s been slow in coming despite crude oil hitting six-year lows.

Oil plunges but petrol and diesel prices drift down like a feather. That’s because around 70% of the price you pay at the pump is tax — both fuel duty and VAT.

Wholesale petrol prices are also priced in dollars, so a good year for the greenback, making it more expensive against the pound, keeps that part of the price higher as well.

But according to the AA, refining margins are on the rise, which has kept up the wholesale price this year when the actual oil price is on the way down.

That’s because refining capacity has been taken out since the crisis, leaving the remaining players to bolster profit margins.

The last time Brent crude was this low, the average cost of a litre of petrol was 91p.

Today, that price is 107p. So drivers who are waiting for the price to be a £1 a litre before filling up shouldn’t hold their breath.