Car fuel prices continue to slide says AA

22nd November 2013

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UK drivers are paying the lowest average petrol prices for more than two and a half years, says the AA.

Compared to a month ago, the average pump price of petrol has fallen from 132.16p a litre to 130.44p. It had risen to a late summer high of 138.38p in the second week of September before the end of the Syrian chemical weapon crisis and the stronger pound sent wholesale prices tumbling.

The cost of diesel has also continued to fall, down from an average of 139.12p a litre in mid October to 137.78p now. It had also hit a late summer high in the second week of September, reaching 142.88p.

At around 7p a litre more expensive than petrol, diesel’s differential is largely consistent with the November price gap over the past two years.

Against an average of just above 130p a litre, the cheapest price for supermarket petrol in built-up areas ranges from 126.7p in towns with strong competition to 131.9p in those without, usually small market and coastal towns like Clacton-on-Sea, Trowbridge and Newark.

Last week, however, some non-supermarket fuel stations in London’s Streatham and Mortlake areas were able to sell petrol at 124.9p a litre.

The independent fuel retailers have lobbied the government for moving the point at which they pay fuel duty and VAT to HM Revenue and Customs. Currently, it is paid when the fuel is picked up at the supply terminal. Switching the point to after the driver has bought it would give the retailers significant cash flow savings. The AA says it would strongly support such a move for helping remote rural fuel stations.

‘Postcode lottery’ towns 

However, AA members and other drivers suffering from pumped-up prices in uncompetitive ‘postcode lottery’ towns would expect some relief themselves. It would be hard to support cost savings for urban petrol stations that are already charging 3p, 4p or 5p more a litre than towns just down the road – unless there was a way of ensuring that those savings were guaranteed to stimulate fairer prices.

Even so, the real ‘game changer’ may come with Asda announcing that it intends to extend its low-price presence by adding 100 ‘standalone’ petrol stations, particularly in the South where ‘postcode lottery’ towns are most common.

Edmund King, the AA’s president says: “A family with two petrol cars was spending the equivalent of £252.54 a month on fuel in September, now it’s £238.05. A company with 100 Ford Mondeos was spending typically £10,000 to fill them up with diesel in mid September, now it’s around £9,640. Last week, it was officially recognised that lower pump prices helped to bring inflation down to 2.2%.

“You cannot understate the importance of lower pump prices. That is why, when the independent retailers say they would get significant savings from delaying the payment of fuel tax, the AA wholeheartedly supports the move if it helps the remote rural and other small petrol stations to survive.

“But,” King adds, “In the many towns where our members and other drivers complain about pump prices being 5p-a-litre higher than a few miles up the road, extra relief for the retailers should be reciprocated with fairer pump prices.”

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