September fuel price update

Pump prices start to fall but shadow of 2007 threatens

18 September 2009

Monthly petrol price rise is second highest ever, warns AA

Petrol prices in the UK have finally turned the corner and started the traditional autumnal fall. However, despite an 8% drop in wholesale costs, average pump prices have yet to wipe out the impact of the Government's 2.3 pence fuel duty + VAT increase on 1 September, according to the AA Fuel Price Report for September.

At 106.33 pence per litre, the mid-monthly average petrol price is still 1.9 pence higher than last month's (104.43). Last week, it hit a new peak for the year of 107.03 pence, making 2009 the second most expensive year ever for petrol prices – despite the recession.

Average UK diesel prices also hit a new high last week of 107.47 pence per litre, before falling back to 107.10 for mid September. This is still 2.14 pence higher than in mid August.

Prices around the country have varied enormously in recent days, with drivers able to buy petrol more cheaply on Skye and the Isle of Lewis than at some major motorway service areas.

Although supermarket petrol prices are averaging more than two pence below the UK average, where drivers live and the competitiveness of local retailers is dictating who gets a better deal. Last weekend's fuel price spat, started by Asda, set 102.9 pence as the low price for petrol, yet another supermarket in Cheltenham had drivers queuing down the road by charging 101.9, before lifting the price back up after the weekend.

Although selectively lower pricing to gain a quick commercial advantage has been seen in some traditionally more expensive towns, a pricing pattern last seen in autumn 2007 could again be emerging. On Tuesday, petrol prices in Reading were as low as 102.9 pence, but down the road in Bracknell and Basingstoke it cost typically 105.9. In Luton, the cheapest petrol cost 102.9 pence compared to 104.9 in nearby Stevenage. Even more bizarrely, the same supermarket chain charged 102.9 pence in one part of Milton Keynes and 104.9 in another part of the town.

Comment

"Whereas US drivers have seen their petrol price fall consistently over the past month, the Government's fuel duty increase made sure that pressure on recession-hit UK drivers continued. The 8% drop in wholesale prices should bring at least a 2 pence drop in average petrol prices but, so far, we have seen less than a penny off last week's summer peak," says Edmund King, the AA's president.

"Areas where supermarkets keep their prices high are ripe for the picking by aggressive independent retailers and last weekend's experience in Cheltenham shows the potential for added sales. The new breed of smaller retailer with a store attached to the petrol station is more widely established than in 2007 and the AA will be watching keenly their impact on fuel pricing and sales patterns."

London (107.2) stands out as the dearest area in the UK for petrol, charging a third of a penny more per litre than second-most-expensive Northern Ireland (106.9). The North West remains the cheapest area at 105.3.

The North West also offers the best price for diesel at 106.0 pence per litre, more than 1.5 pence cheaper than London (107.8), the highest-priced area.

View the full AA Fuel Price Report .

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18 September 2009
(Price data provided by Experian Catalist)