Supermarkets drop petrol prices to under £1 per litre for the first time in 4 years

Supermarkets drop petrol prices to under £1 per litre for the first time in 4 years
The average cost of filling up a car with unleaded petrol has dropped to its lowest level since 2016, as a result of the historic oil price falls caused by the coronavirus outbreak, data from RAC Fuel Watch shows1.

After last month's unprecedented fuel price drops, May seems set to be even more extreme; Morrisons, Asda and Tesco are now selling petrol for less than £1 per litre

It now costs less than £55 to fill a 55-litre hatchback car and there is potential for further price cuts if lockdown restrictions are lifted.

RAC fuel spokesman Simon Williams said: 

“Although the lockdown is far from over, yesterday’s speech from the prime minister was a signal to drivers that they can begin to make more trips by car again – so credit is due to Morrisons for taking the lead and selling petrol and diesel at what is a very fair price and one that is much more reflective of what the retailer is itself paying to buy the fuel in.

“Unfortunately though there is a darker side to any large price cuts – they heap yet more pressure on smaller independent fuel retailers, who in some cases are already fighting for survival as a result of the coronavirus outbreak.

“It remains to be seen how long prices this low will persist for, with some early indications that wholesale petrol prices have started to rise as a result of the world oil price creeping up.”

Ironically, the impact of the coronavirus, despite being one of the main factors in why UK fuel prices have dropped, is also the reason why they are not falling any further.

The cost of oil collapsed to its lowest level in 21 years last month – down to just $13 on 21 April – as a result of demand disappearing in the wake of the coronavirus outbreak. But while this sent wholesale prices plunging still further in the month, some of the UK’s largest fuel retailers did not cut forecourt prices with so few people buying fuel in the first place.

This was in sharp contrast to March which saw the supermarkets announce an unprecedented 12p per litre price chop on a single day.

April can therefore be seen very much as a ‘catch-up’ month for other fuel retailers – while supermarket prices were largely static, other forecourts finally cut their prices which led to the average price paid by drivers across the UK falling.

Subject to any significant easing of the coronavirus lockdown restrictions that have forced millions of drivers to restrict the number of journeys they have taken since 23 March, there remains scope for a further reduction on the prices of both petrol and diesel. Clearly however, retailers are only going to reduce prices again if they can be confident of selling fuel in large enough quantities.

The average price of a litre of petrol fell by 4.15p in April, from 113.1p to 108.95p, meaning the cost of filling a 55-litre hatchback car fell from £62.21 to just £59.92.

Those able to refill at the cheapest UK supermarket forecourts meanwhile were able to do so for just £56.49. Drivers of diesel cars can now refill for under £63, thanks to the average price of a litre falling nearly 3p from 117.5p to 114.54p per litre last month.

Check out the latest fuel prices by visiting RAC Fuel Watch.

 


1 UK average fuel prices quoted in the RAC Fuel Watch April 2020 report are based on Experian Catalist data from 1 to 30 April 2020 (pump prices). Wholesale prices, oil price and the value of sterling are based on data from 1 to 30 April.

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