November fuel price update

Nothing mild about winter diesel prices

18 November 2011

Nothing mild about winter diesel prices

Nothing mild about winter diesel prices

Diesel car owners have seen no benefit from falling oil prices, with the average pump price up more than a penny a litre over the past month. The cost of petrol has dropped slightly, opening up a price gap between the two fuels that has never been bigger except during the extraordinary price spikes of 2008, the AA Fuel Price Report reveals.

The average price of petrol has fallen just 0.81p a litre, from 134.51p in mid October to 133.70p now. Diesel, the mainstay for business, has risen on average 1.3p a litre, from 139.65p a month ago to 140.95p now.

Break-even point is stretching

The 7.25p price difference between the two fuels, although dwarfed by the 15.3p gap in late November 2008, bodes badly for owners who traded in their petrol cars for diesels. Many switched in the hope that greater fuel efficiency would recoup the extra cost of buying the vehicle (£1500-£2000 for a small car, £500-£1000 for a large car) before saving significantly on subsequent fuel costs. The break-even point is now stretching further away as the price gap grows.

That petrol-diesel gap varies regionally, biggest in Scotland at 8.2p a litre and smallest in London at 6.1p, although there is often a greater variety of diesel prices among local fuel stations than with petrol.

Creeping down

The need for drivers to keep an eye out for lower prices also rings true for petrol car owners. Although the average price has fallen over the past month, it has yet to reflect the full drop in the NW Europe wholesale cost, from around 50p a litre in early September to around 45p now. Average UK petrol prices started to fall away from a high of around 136p a litre in late September and continue to creep down, although faster at some petrol stations than others.

Undercutting supermarkets

Some independent retailers have been undercutting supermarkets in neighbouring towns by as much as 3p a litre this month and localised price-matching has created a price difference between towns of as much as 5p a litre. Drivers using social network groups could advise others who regularly drive the same route or in the same area of lower prices, providing more immediate notice of price changes. It would also allow retailers to advise customers of fuel price changes that undercut rivals.

Tuesday’s House of Commons debate on high fuel prices offered little hope of a freeze in fuel duty and diesel woes, if they continue, will intensify pressure on the Treasury

Edmund King, AA president

Comment

“The fall in the price of oil due to the eurozone crisis had brought some hope of respite for drivers but the opposite has happened for diesel car owners. The petrol price may have been falling overall, but it’s dropped faster for some than others, and that adds to the frustration,” says Edmund King, the AA’s president.

“Tuesday’s House of Commons debate on high fuel prices offered little hope of a freeze in fuel duty and diesel woes, if they continue, will intensify pressure on the Treasury. It may help them to note that the 15p higher price of petrol and 18p for diesel, compared to a year ago, includes respectively a 2.5p and 3p-a-litre VAT windfall – if they’re still wondering how to finance the freezing of January’s 3.02p fuel duty increase.”

Regions

Regionally, the most expensive petrol is being sold in London, averaging 134.8p a litre, while diesel is dearest in Northern Ireland at 141.8p a litre. Yorkshire and Humberside is the cheapest region for both, averaging 132.8p for petrol and 140.3p for diesel.

(16 November 2011)