The fuel price war between the big four supermarkets has pushed prices on the forecourt closer to £1 a litre after Asda said it would cut petrol and diesel by 2p a litre from Tuesday and Tesco responded with immediate price reductions.
Morrisons and Sainsbury’s have also cut 2p a litre, bringing prices at the pumps to a five-year low. The latest reductions mean Asda customers will pay no more than 105.7p a litre for petrol and 112.7p for diesel.
It was Asda’s 14th fuel cut since the end of September, having taken 21p a litre off petrol and 17p a litre off diesel. For Morrisons and Sainsbury’s, it was the seventh cut since the beginning of December.
Oil prices have slumped to five-and-a-half-year lows on global markets after a US fracking boom, record oil production in Russia and the highest Iraqi exports since 1980 have kept the market oversupplied. Benchmark North Sea Brent has lost half its value since the middle of last year and on Monday was trading down 4% at about $54 a barrel.
Andy Peake, Asda’s director of petrol trading, said: “As fuel prices continue to drop, Asda is leading the way with our fourteenth price cut on fuel since September. No matter where customers live, they will benefit from the same fuel price with our national price cap.”
Motoring organisations welcomed the cuts. The RAC’s fuel spokesman, Simon Williams, said: “With the average price of petrol already at levels not seen since January 2010, this latest cut will send the average price (112p) even lower, which is more great news for the motorist as millions head back to work following the festive holiday. We think there is still more room to cut further, perhaps by as much as 5p to 6p by the end of January.
“The cuts are bringing us ever closer to the £1 per litre average for petrol which the RAC said last month could be a possibility for the start of the new year. Of course it would also be an extremely welcome move for motorists and businesses alike.”
The AA president, Edmund King, said: “Further drops in the pump price are extremely welcome. However, small rural towns are again being left behind by the price falls in the more competitive areas. This continues to feather the fall in the national average.
“We would love to see £1 per litre and we may possibly see it in many parts of the UK but it is unlikely that the average price will drop as quickly to the £1 level, partly because 70% of the price is tax. There is still a price lottery out there so we advise drivers to shop around.”
Tesco, Britain’s biggest petrol retailer, stole a march by cutting the price of fuel by 2p at its 500 forecourts on Monday afternoon. Peter Cattell, the grocer’s fuel director, said: “It’s the new year and we want to give our customers a helping hand, many of whom will be going back to work today.”
Head of fuel at Sainsbury’s, Avishai Moor, said: “This is another way in which we can help put money back in customers’ pockets after the Christmas period.”
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