Advertisement

Danny Alexander tells ITV News he wants companies to do more to pass on savings from the fall in the price of oil

Unleaded petrol is expected to fall below £1 a litre soon Photo: PA Wire

The chief secretary to the Treasury, Danny Alexander, has told ITV News he wants companies to do more to pass on savings from the fall in the price of oil to their customers "not in six months time but now".

At a cabinet meeting this morning the Chancellor expressed concern that the full benefits weren't being felt and ordered the Treasury to investigate the behaviour of airlines and utility companies among others.

The average price of unleaded petrol stands at £1.11p a litre and falling. The bookies have odds on that it will soon fall below £1 a litre for the first time in five years. But the point is that the fall in the oil price shouldn't just be good news for motorists.

Oil is the lifeblood of the global economy. When the price of oil falls, the price of more or less everything should fall too. Danny Alexander says he wants to see cheaper air fares, package holidays and cheaper energy bills.

The slump in the oil price since the summer has been remarkable. While the benefits are being felt in Britain, elsewhere in the world it's causing headaches.

Russia and Saudi Arabia are big oil producers, their governments have become accustomed to spending money banking on an oil price of $100+ a barrel.

It’s also worth noting though that large, rapid movements in market prices aren't necessarily a sign of good health. And on the financial markets the price of company shares, government debt, the value of Euro - they've all bounced around.

It's a sign of anxiety. Anxiety about stagnation in the Eurozone, anxiety about whether Greece will stay in it - remember a general election looms and the party out in front in the polls, Syriza, is committed to implementing anti-austerity policies that are inconsistent with continued Euro membership. Of course, there's always something to worry about but Andrew Sentance, a former member of the Bank of England's Monetary Policy Committee, believes 2015 will be a "quite a good year" for the British economy - not least because of the price oil which he cautions is unlikely to remain so low for long.