Supermarkets go to war over fuel prices

Fuel prices look set to fall further, as supermarkets across the UK continue to go to war over petrol prices.

Towards the beginning of the month, both Asda and Morrisons announced a 1p cut in the price of petrol, with diesel cuts coming in at 4p and 3p respectively. Tesco followed suit, matching Morrisons’ 1p and 3p reductions.

The battle continued in the following week, with Tesco and Morrisons both announcing further 2p cuts and Sainsbury’s joining in with a 2p cut as well.

On 16 August, Asda cut prices again to bring their reductions in line with Tesco and Morrisons.

Oil price plummets

The cuts come as North Sea oil prices continue to plummet, with the price of crude oil down by around 27 per cent since May.

Concerns over the price war have been raised by the independent fuel sector which says small filling stations will struggle to compete with the supermarkets without making a loss.

Brian Madderson, from the independent RMI Petrol group, told the BBC that for consumers, “the lure of cheap petrol is very strong” and “independents don’t have the huge size of a big store to help them cross-subsidise” and therefore cut prices.

Savings not being passed on

Many commentators have noted that the drop in oil price is not actually being passed on directly to the consumer at the pumps.

Research from the AA has shown that even though there has been a slight fall in the average unleaded petrol price, it doesn’t actually reflect the drop in wholesale price which is the equivalent of at least 3p per litre.*

Libyan conflict to affect prices?

Elsewhere in the world, events in Libya may have a positive effect on the fuel price market in the UK.

As Gaddafi’s regime apparently crumbles and conflict subsides, oil production in Libya is expected to return to normal.

Libya was a big player in the global oil market before the crisis began in March, producing 1.5million barrels each day in 2010.

At that time, petrol was just below 130p per litre in the UK and many hope this will be the case again once industry is restored in the war-torn country.

Current prices

To give you an idea of current prices, below is a table showing how the big 4 supermarkets shape up today (26 August) in Cardiff.

Petrol is very important to supermarkets in getting customers to shop at their stores, so it’s unlikely that prices will stay stagnant.

You can get a break down of how much you spend on petrol with our fuel cost calculator.