Currency and commodity market pincers squeeze motorists and fuel demand
A third petrol-price surge of 8p or more within the past 12 months has begun to collapse. The latest AA Fuel Price Report shows that, since early January, the average UK pump price of petrol has swung from around 132p to 140p a litre.
Over the past month, the average UK cost of petrol has gone up from 138.32p to 139.91p a litre, culminating last week in this latest price surge reaching a peak of 140.03p. Had January’s 3.02p-a-litre increase in fuel duty gone ahead, attracting a further 0.6p in VAT, April 2012’s record petrol pump price of 142.48p would have been exceeded by at least a penny a litre.
Between mid February and mid March, the average price of diesel has risen from 145.10p a litre to 146.38. In April 2012, it had hit a UK record of 147.93p.
A supermarket ‘price war’ which broke out on Tuesday began, in reality, a fortnight earlier when the lower wholesale cost of petrol started to register on non-supermarket forecourts, many undercutting local superstores by as much as 2p a litre.
Even at the end of February, the fuel trade’s magazine showed that Shell and Esso company sites and Jet sites were on average undercutting at least one major supermarket. By the start of this week, the average cost of petrol at Murco was below Tesco’s and Sainsbury’s, with Esso and Jet not far off.
Tuesday’s 4p-a-litre cut in supermarket petrol, initiated by Sainsbury’s, fairly reflected lower wholesale costs. However, had the pound retained its start-of-the-year value in the dollar-denominated fuel markets, being worth around $1.6 then instead of below $1.5 now, drivers would have been looking forward to a 7p or £3.50-a-tank cut in petrol costs.
Wholesale and pump petrol price rises (January to March 2013)
Average UK prices per litre:
The AA welcomes Sainsbury’s straightforward cut in pump prices, rather than tying pump savings to in-store purchases first – as has happened with some supermarket fuel price cuts in recent years
Edmund King, AA president
“To be fair to most supermarkets, they take longer to pass on initial increases in pump prices, and seeing non-supermarket retailers getting a head-start when costs fall is perhaps to be expected. The AA also welcomes Sainsbury’s straightforward cut in pump prices, rather than tying pump savings to in-store purchases first – as has happened with some supermarket fuel price cuts in recent years,” says Edmund King, the AA’s president.
“The real complaint is that, without wholesale price transparency (see above), hard-pressed families cannot anticipate when their budgets are going to take another hammering from yet another fuel price surge or when the pressure will ease when wholesale prices fall. Additionally, the financial chaos and uncertainty created by an unprecedented three rounds of wholesale price surges and collapses in one year would become more explicable with a published track – illustrating why the cost of a tank of petrol has temporarily soared and fallen £5 on three occasions in 12 months.
“The wisdom of the Chancellor’s decision not to increase fuel duty in January is borne out by the certainty that, had it gone ahead, UK pump prices would have set new records and would have added a driver backlash to the Government’s pressures. With the Budget next week we are also warning the Chancellor that further duty increases forecast for September could back-fire on the economy.”
Regionally, the cheapest petrol is being sold in the North and Yorkshire and Humberside, both averaging 139.3p a litre. Northern Ireland is the most expensive at 141.1p a litre, substantially more expensive than the next dearest, 140.5p, in the South East.
At 147.1p a litre, the South East is also significantly most expensive for diesel than its nearest rival, Northern Ireland, averaging 146.7p. Yorkshire and Humberside is also the cheapest region for diesel, at 145.7p