July 23, 2008

UK supermarkets have fired the first shots of a price war, at the fuel pumps.  Asda and Morrisons have signalled that they’re looking to reduce their fuel prices by 3 and 4 pence per litre respectively.

The UK’s largest supermarket, Tesco has responded saying that it will look to cut it’s prices by up to 4p, but will set it’s prices locally.  Similarly Sainsbury’s have committed to match local prices on a case by case basis.  Both Sainsbury’s and Tesco are planning extra offers for people sending over £50 in store too.

The current supermarket price war will offer consumers some small respite from the record fuel prices, currently being suffered at the pumps.  With the government either unwilling or unable to offer consumers any respite from the rocketing prices the price cuts are sure to be welcomed.

The fuel prices have been affected by the rampant increase in oil prices, with oil hitting a peak of $147 per barrel earlier this month.  They have since abated and fallen back to $132 a barrel.  This has resulted in a 6% fall in the wholesale price of petrol since the peak earlier this month.

It is hoped that other petrol retailers will also follow suit and reduce the price of fuel.  David Miles, Asda's trading director, said: "We are seeing a more stable reduction in oil prices, allowing us to pass on the savings to customers.
"We urge other retailers to follow our lead at a time when customers need as much help as possible."

BP said pump costs at the 310 sites where it sets the price had fallen by an average of 2p per litre, with some stations seeing a reduction of 4p per litre.
"We don't have a national pricing strategy. We set our prices on a site by site basis in response to the local market and crude oil," said spokesman Mark Salt.
However, there are a further 950 stations selling BP branded fuel that they have no control of.

Motoring associations have welcomed the reductions and urged all retailers to follow suit.  "The AA expects fuel suppliers to pass on, not pocket, the saving for the good of UK families, hauliers and the economy," said AA president Edmund King.
"Should fuel suppliers and retailers appear to be dragging their feet we will seek to expose this."

Ray Holloway, of the Petrol Retailers Association, said independent fuel retailers would be unlikely to respond immediately to the cuts.
"The supermarkets are moving the price in anticipation of further falls in the wholesale price, " Mr Holloway said.
"Independents will pass on those falls in due course."

Leave a comment

Type into the box below