August fuel price update

Loyalties tested as pump prices crash

Diesel new car sales dip 4% after this summer’s pump price rip-off

Diesel new car sales dip 4% after this summer’s pump price rip-off

A 9p-a-litre fall in the pump price of diesel this summer echoes the price collapse in the autumn of 2008, when the cost of diesel fell as much as 9p a litre in just one month. Ironically, both price crashes have coincided with declining diesel car sales after inflated fuel prices left owners feeling they were being treated like ‘chumps at the pumps’, the latest AA Fuel Price Report notes.

Other consumer loyalties are being tested as one of the most successful supermarket fuel discount schemes is wound up – despite a consumer intelligence report highlighting the advantage that loyalty reward cards give supermarkets in the pump price battle.

  • Diesel price drops to 5½-year low, but ...
  • Diesel new car sales dip 4% after this summer’s pump price rip-off
  • Supermarket loyalty card changes threaten competitive edge in the fuel market

Diesel prices

The lion’s share of the diesel price collapse has come since mid-July, with the UK’s average price of diesel tumbling 7.4p from 119.33p to mid-August’s 111.93p – a price last seen in January 2010. Diesel peaked this summer at 121.00p in mid June, now giving diesel car owners a saving of 9p a litre or at least £5 a tank.

Petrol prices

Average petrol prices have also fallen, down nearly 2.5p a litre from 117.24p last month to 114.84p now. This is a level last seen in late April this year.


At wholesale level, the cost of petrol has dropped 2p a litre over the past fortnight, pressuring for a further fall in the average UK pump price. The cost of diesel has flat-lined since the beginning of August, but remains 1.5p a litre cheaper than petrol so far this week.

2008 price collapse

Back in late 2008, as the credit crunch gathered pace, the average price of diesel continued its collapse by dropping the nearly 9p a litrefrom 117.68p a litre in mid October to 108.8p in mid November (petrol crashing even faster – 11.5p a litre in the same period, from 106.4p to 94.9p).

Retail vs wholesale

Diesel commodity prices, once the $/£ exchange rate is factored in, have been falling at roughly the same rate (11-13%) now as they did in the autumn of 2008. The difference this time is the fuel retailers’ decision, principally Asda and Morrisons, to end the shame of the 2015 Great British Diesel Price Rip-Off. In many places, this has brought the pump price of diesel 4p or more below petrol’s, in line with wholesale costs the week before last.

The scope to do this is illustrated by the track below, showing how the gap between the price of petrol and less-expensive diesel at wholesale level was not reflected at the pump throughout the spring and most of the summer:

Diesel price rip-off

Diesel price rip-off

NOTE:  In the run-up to 2015, diesel was around 5p a litre more expensive than petrol both at wholesale level (purple) and at the pump (cream). Through the early part of 2015, while the gap between the cost of diesel and petrol at wholesale level shrunk to 4p a litre, at the pump the price gap grew to 7p. By April, wholesale diesel cost the same as petrol, but was 4p-6p a litre more expensive than petrol at the pump. That 4p-6p discrepancy between what retailers typically paid for diesel and what they charged at the pump continued through until the end of July.

Diesel car sales fall

This change in fortunes for diesel car owners may have come too late to stop them thinking twice about buying a diesel vehicle. In July, sales of diesel cars fell 4% compared to July 2014 - after a 5.8% year-on-year increase in June1. Although there has been some scrutiny of the urban emissions from diesel vehicles, and VED changes in the Chancellor’s summer budget will remove the car tax advantages of low CO2 vehicles, many of them diesels, the impact is considered unlikely to have significantly swayed new car buyer choice so soon.

Killing off the ‘dash for diesel’

Perhaps more likely, it is a repetition of the fallout from diesel drivers being charged a premium at the pump. In 2008, the pump price of diesel was up to 14.5p a litre higher than petrol in the early summer. This undermined the savings from diesel’s greater fuel efficiency and was credited with killing off the ‘dash for diesel’ – a seven-year boom among both business and private users that took the number of new diesel registrations from 313,392 in 2000 to 967,436 in 2007. However, in 2008, new diesel car sales fell to 928,605 and then 832,456 in 20092. By the autumn of 2008, sales of new diesel cars were falling almost as fast as new petrol cars (-20.3% v -25.2% respectively in October 2008)3.

Supermarket loyalty

As well as questions over fuel-type loyalty, retailer brand loyalty will be tested by a significant change in supermarket reward cards as Tesco’s hugely popular Fuel Save reward card scheme terminates at the end of August4.

Evidence from consumer intelligence firm Market Force Information5 suggests that loyalty reward schemes have the edge. A survey of 5,900 consumers in June found that Sainsbury’s, with its reward card, pipped Asda, with its low prices, to top spot – 52% v 50%.

The report highlighted “loyalty cards being a primary driver”, with Tesco’s scheme beating Sainsbury’s by 58% to 57%. However, on fuel price reputation, Asda was way ahead of its rivals, polling 53% versus 39% of its nearest rival.

When the fuel price market settles down again and competition becomes less fierce, probably heading into winter, it may well be that the downgrading of reward incentives will hit home for drivers. Less generous supermarket reward points (compared to the pre-credit crunch heyday when buying a litre of fuel could add the equivalent of 2p to a reward card), fewer cashback credit cards with real credit card savings only available to those who stump up a £20-£25 annual fee first, and access to fuel cards only available to business drivers may leave the ordinary consumer feeling somewhat disadvantaged.

Surprisingly, the Market Force Information study found that only five per cent of their poll used mobile price-search apps to find lower-price fuel.

there are indications that drivers are sensitive to sustained price disadvantages of a particular fuel type

Paul Watters, AA head of policy

Warning signal

“It’s too early to tell if it’s all change at the pump as motoring consumers react to changes in the market, but there are indications that drivers are sensitive to sustained price disadvantages of a particular fuel type,” says Paul Watters, the AA’s head of policy.

“The July fall in diesel car sales may be a blip, but its echo of the sales downturn in 2008 after diesel car owners lost out badly on pump prices sends a warning signal.”

“The supermarket fuel forecourt wars have for years centred on price versus rewards, whether as reward cards or vouchers. Asda has carved out its reputation for bargain-level prices, Tesco drew millions to its Fuel Save reward card scheme. The question now is what happens after the closure of the latter: will price play a stronger role or will we see a return to the vouchers that favoured families but offered little to single people, pensioners and other lower-income customers?”

UK national and regional

Across the UK, the average price of petrol is cheapest in Yorkshire and Humberside, the South West and London, at 114.7p a litre, while Scotland is most expensive with an average of 115.2p a litre.

The North, Yorkshire and Humberside, East Midlands and South West sell the cheapest diesel, averaging 111.8p a litre. Scotland sells the dearest, with an average of 112.4p a litre

(21 August 2015)

Fuel price data supplied by Experian Catalist

Wholesale price data provided by

1.  New diesel car registrations: July 2015 – 87,672, July 2014 – 91,322, % change -4% (Mkt share: July 2015 – 49.1%, July 2014 - 52.8%). Previous % changes: June 2015 +5.8%, first half 2015 +3.5%.

2. Page 14,

3. Press release,


The Clubcard Fuel Save scheme will end on 31st August 2015 (with redemption of Clubcard Fuel Savings earned in August 2015 continuing until 30th September 2015). However, we reserve the right to amend or withdraw this offer at any time before this date, without prior notice.