August Petrol Price Update

Pump prices defy prediction but South and rural Scotland still suffer

Pump prices defy prediction but South and rural Scotland still suffer

20 August 2010

A fall in the wholesale price of petrol in recent days has killed off an industry prediction of a 4p surge in pump prices running into the bank holiday, says the latest AA Fuel Price Report.

Drivers are cutting back, often only buying 10 to 15 pounds worth and driving on And, with one retailer already lowering pump prices through August, drivers are hoping for further relief from petrol prices that are more than 12p a litre or £6 a tank higher than this time last year.

Over the past month, average UK petrol prices have trickled lower from 117.46p a litre to 116.52p. Diesel costs have also fallen, from 119.73p in mid July to 119.15p now (these prices were recorded before Asda announced its price reductions).

This is despite a short-lived increase in petrol wholesale costs of around 1.5p a litre in early August. This failed to register at the pumps as hard-pressed drivers cut back on fuel purchases and gave expensive fuel stations the cold shoulder.

North-south divide

However, the north-south price gap remains higher than normal as some retailers stubbornly charging higher than average prices.

In mid May, petrol across the north (North, North West and Yorkshire/Humberside) averaged 120.9p a litre, while across the south (South East, South West, London) it was 121.8 p/litre. This month’s figures show the north averaging 115.5 p/litre compared to 117.2, nearly doubling the price gap from 0.9p to 1.7p.

Holiday routes west

Holiday drivers heading to the West Country from the South along the A303 have discovered petrol prices in Ilminster 3p to 4p lower, without the influence of a low-priced Asda outlet, than in the major southern towns they come from.

Motorway service area prices along the M4 have improved in the past fortnight but, at 121.9p to 123.9p a litre these compare unfavourably with the 116.9p being charged at Tiverton and Cullompton sites on the M5.

Scotland

Any improvement in pump prices over the past month shows little or no sign of filtering through to fuel stations in the Highlands and isles of Scotland.

At 128.9p a litre in Lerwick and 125.9p in Ullapool, the fierce reaction of local politicians to the false prediction of an imminent 4p rise underlines the strength of feeling.

The opening of an automated fuel pump at Applecross, run by the community of less than 200 people and helped by Lottery and rural development funding, may offer a new way forward for remote rural areas.

Highest and lowest

Across the UK, the cheapest region for petrol and diesel is Yorkshire and Humberside, respectively 115.4p and 118.1p a litre. Petrol is most expensive in London at 117.5p a litre and diesel is dearest in Northern Ireland at 120p.

Comment

"This summer has seen both drivers and retailers struggling to come to terms with petrol prices that are much higher than a year ago. Drivers are cutting back, often only buying £10-£15 fuel at expensive sites when they have to and then driving on. Many of the more expensive retailers have brought their prices down to try to revive sales, one telling the AA that "our owners say we need to be more competitive", says Paul Watters, the head of AA Public Affairs.

"Scaring drivers with false predictions of imminent price rises was not the retailers' finest hour, but the AA is more worried by the price gap between towns in the South. We fear that this has helped to keep UK average fuel prices higher than they need to be and is largely due to some of the major supermarkets continuing to offer competitive pricing only where they need to.

"Asda's price reductions this week were very welcome news although we have noticed Shell fuel stations often offering the lowest prices in towns without the supermarket's presence. Jet's petrol and diesel also averages slightly below Tesco in the comparison of prices by brand."

Watters adds: "With so much oil and wholesale price volatility, due to market speculators betting on changing economic indicators, predicting where prices will go is dangerous. However, it is clear that many drivers have had enough of higher prices: July's 11.8% year-on-year increase in diesel car sales despite the £1000 extra cost of buying one provides strong evidence. In our surveys, drivers are telling us that their next car must be one that is cheaper to run."

Wholesale Prices

the graph shows wholesale petrol price movements, tracking from record high petrol pump prices in early May to now.

Wholesale petrol price movements from early May to mid-August

Petrol pump prices (top line) are with fuel duty and VAT stripped out, leaving cost of product, retailer margin, transport costs and other additional costs.

Both are in pence per litre.

The track shows the 1p to 2p increase in the gap between the product cost and the pump price (minus tax).

View the full AA Fuel Price Report »

UK pump price data provided by Experian Catalist

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19 August 2010