February Fuel Price Update

UK petrol price average fails to reflect cheaper wholesale cost

17 February 2010

Weekly cost of family petrol goes up nearly &12.50 in one year

UK average petrol prices have stagnated at around 112p a litre for a month despite a 2p fall in the wholesale cost, the latest AA Fuel Price Report reveals.

Between mid-January and mid-February, the average UK price of petrol edged up from 111.80 pence per litre to 112.10. Wholesale petrol prices that had been above 34p a litre in early January fell to around 32p by early February1. Average UK diesel prices have also been sitting on a plateau, at 113.84p a litre now compared to 113.65 in mid January.

Initial supermarket reluctance to pass on the savings opened the door for independents to undercut them significantly in towns lacking Asda's lower-price influence. Mid-monthly figures for Esso, Jet, Shell and Murco show that their national average petrol prices were below one of the main supermarkets.

Supermarket Morrisons' decision on Saturday to cut its petrol and diesel prices has yet to make a significant dent on the UK average. However, for the first time since the turn of the year, the move has brought 109.9 a litre for petrol back to towns lacking an Asda fuel presence. There is also evidence of other supermarkets now beginning to lower their prices, but some motorway service areas are still charging between 117.9 and 119.9p a litre for petrol.

Regionally, although Yorkshire and Humberside offers the cheapest fuel, averaging 110.9p a litre for petrol and 112.8p for diesel, East Anglia stands out as the only region to have seen both its average petrol and diesel prices fall – albeit by 0.1p a litre. Growing resentment at high fuel prices in Northern Ireland will be fuelled further by the widening gap between the region's average prices, 113.5p for petrol and 114.9 for diesel, and the UK national average.

Comment

"Time will tell the extent to which the general reputation of supermarkets as the place for cheapest fuel has been dented in recent weeks. We know from our research that £1.10 a litre is when driver tolerance of higher fuel prices begins to evaporate, and £1.12 may have been sufficient for many car owners to reconsider who they buy their fuel from," says Edmund King, the AA's president.

"The AA fears that the recent fall in the wholesale price is only a brief respite – inflation-linked fuel tax increases are due in April and stock market speculators in banks bailed out by the taxpayer are once again fixing their sights on $100 a barrel for oil. With AA/Populus research showing that more than 60% of drivers are cutting back on car use or other consumer spending because of high fuel prices, cash-tight motorists will become increasingly choosy as to where they buy their fuel."

Factfile

1Wholesale $ prices for gasoline in Europe fell 8.2% between early January ($730 per tonne) and early February ($670), although a weaker pound reduced the saving to 6.3% for the UK market.

View the full AA Fuel Price Report »

UK pump price data provided by Experian Catalist

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19 February 2010