Friday, September 19, 2008

Price war forces petrol prices down

Petrol prices fell across the UK today as a price war brought a hint of relief to motorists struggling to fill their cars.

Supermarkets led the way last night as they followed Morrisons in announcing cuts in fuel prices – and today BP and Shell say they have followed suit reducing their prices on the forecourt.

The price drop will give Morrisons customers a national average of 107.7p for unleaded and 119.2p for diesel, but no overall national figures will be available to test the price cuts until Tuesday.

The AA says that last night a national fall of just a fifth of a penny had been measured. On this day last year the average price for a litre of petrol was 95.22p. Nonetheless customers at supermarkets with aggressive price policies were surprised and delighted to see petrol back below 110p per litre today.

John Black, 25, from South Milford, North Yorkshire, said: “They’re going back down, that’s all right really. It’s still expensive but it’s better than it was.

“Because of the high prices, I haven’t been putting as much petrol in my car recently and I’ve tried not to drive as much.”

Dan Howard, 25, a traffic management operative, was buying fuel from Morrisons, in Knottingley, West Yorkshire, where the price of unleaded had fallen to 108.9p a litre.

Mr Howard, from North Yorkshire, said: “It’s better for motorists obviously. I think they’re still too expensive, they should be about 70p a litre but that’s just wishful thinking.

“Everyone will be happy. It’s got to be a good start at least.”

Mr Howard said it was not always possible to find the cheapest petrol station. “I just stop wherever I am. If you’re running out of fuel you’ve got to put it in,” he said.

The uneven nature of fuel pricing will be highlighted once again by the supermarket’s price cuts said an AA spokesman.

Any town with an Asda, Morrison’s or Tesco petrol station will see prices falling on all forecourts in the area, Shell and Esso garages in areas with less competition, however, will keep their prices relatively high.

Supermarket chain Morrisons sparked the latest price war yesterday by announcing it was cutting the price of fuel by 3p a litre across its 285 stations.

Darren Blackhurst, trading director at Asda, called on rivals to match its move in the price war.

“We are calling on other retailers to follow our lead and give drivers a fair deal at the pumps, not just those that live near an Asda,” he said.

A fall to 107.7p would bring prices back to the March level when a new high was recorded in the wake of oil pushing through the $100 per barrel barrier. The highest national petrol average price this year and indeed of all time was 119.7p recorded on July 17.

An AA spokesman predicted that prices would continue to fall in the coming months but that to see a return to last year’s figures would require a significant spike in the value of the dollar or a global recession which would force down demand.

Earlier this month, the AA said petrol prices were still too high and the drop in the price of oil was not being passed on to motorists.

AA president Edmund King said prices were 2p higher than they should be and that oil companies had been “too slow” in passing the drop in the oil price on to customers.

The price of crude oil fell below 100 US dollars a barrel earlier this week for the first time since April - down around a third from the July peak of 147 US dollars - but the Petrol Retailers’ Association (PRA) insisted this was not the only factor contributing to prices at the pump.

Ray Holloway, director of the PRA, said: “The price of fuel at the pump is influenced by a range of factors beyond just the price of a barrel of oil, but despite this, forecourt retailers have still managed to reduce the cost of fuel to the motorist at the expense of their own profit margin during recent weeks.

“Prices for crude oil and forecourt fuel are obviously linked but they do not move in tandem. Therefore they do not automatically move up or down at the same time.”

Mr Holloway said that while the price of crude oil had fallen, the wholesale price that retailers pay for petrol had remained the same.

Article Courtesy : http://www.timesonline.co.uk/tol/news/uk/article4787491.ece

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