And a leading investment house has drastically cut its three-month forecast for Brent crude from $80 a barrel to $42.
Goldman Sachs said the price would stay close to $40 for most of the first half of this year, at which price the firm said investment in the US shale gas industry would be held up.
The oil price has now fallen by more than half since June, when the price stood at $110 per barrel, triggering a series of crisis meetings today – and in recent days – between the industry and Energy Ministers in Edinburgh, London and Aberdeen.
Meanwhile, the forecourt cost of petrol in the UK is being cut in response to the recent falls, with one Birmingham garage selling petrol at 99p / litre (about £4.50 per gallon)
Last night, David Hunter, an Edinburgh-based energy analyst at Schneider Electric commented: “Whilst the recent commodity price falls take us closer to the £1 barrier, for the time being prices below the pound will be the outlier rather than the rule.
“If oil remains at $50 and the dollar exchange rate is stable, I would expect average unleaded prices to fall to something like £1.03-£1.04 per litre. For us to reach the hallowed ground below £1 it would take Brent levels sticking at around $42-$43-barrel. Whilst this isn’t unfeasible, we’re a little way off yet.
“Consumers waiting for falls to fill their tanks need to be conscious that there’s always a time delay between movements in the unrefined crude oil market and changes to prices at the pumps. The crude has to be sold, transported to a refinery, refined and distributed to the retailer before the price effect can be seen. Even then it can be impacted by high-stocks, demand constraints and fluctuations in the exchange rate.
“Ahead of the general election the impact of duties on fuel costs will be heavily scrutinised by consumers. As commodity price falls, the duty cost remains unchanged, resulting in those charges making up a larger proportion of the pump price. In July the tax and duty mix accounted for around 60% of the total petrol price, now it’s knocking on the door of 70%.”