Motorists will have to ‘look even harder’ as supermarkets
end battle of ‘cheap petrol’

By TOBY WALNE FOR THE MAIL ON SUNDAY

Want to save on a tank of petrol? Better fill up today as the latest battle in the price war between some of the biggest retailers draws to a close.

Until midnight tonight, supermarket Morrisons is offering a promotion of 6p off the price of a litre of fuel to shoppers who spent £40 at its tills before May 1.

Morrisons is not the only supermarket whose offer ends today.

Self-employed decorator Janet Baker
 

Co-op is knocking 5p off a litre until midnight tonight for shoppers who gained vouchers from spending £30 in one of its stores.

Sainsbury's was offering 5p off a litre of petrol for anyone spending £50 at its stores with a promotion that ended on April 26.

The backdrop to these bargains, which are expected to be lossleaders for supermarkets as they try to get customers to spend on more profitable goods in their stores, are price rises of 15p a litre for unleaded petrol and 20p a litre for diesel since April 2010.

The price of a litre of unleaded petrol is now on average 135.8p while diesel is 142p, according to the AA's latest data. It found that supermarkets were the cheapest outlets, offering an average of 133.3p for a litre of unleaded.

Yorkshire and Humberside are the best areas to fill up in, with an average of 135.1p for a litre of unleaded across all outlets. Northern Ireland and the South-East scored the worst, charging 136.3p.

Brendan McLoughlin, managing director of comparison website petrolprices.com, believes that motorists must work even harder to find the cheapest pumps.

'The price of filling up a tank can vary by several pounds due to how often the station needs to put in new fuel and local competition,' he says. 'Supermarket promotions look good on paper but, as you also have to shop there, they may not offer the best value overall.

'When oil prices are volatile and rising, you may get a better price at a less popular petrol station.'

This is because supermarket pumps may fill up every day due to the high levels of custom they attract and must pay the market price at that time. A less busy petrol station filling up once a fortnight may have paid less.

However, in rural locations where there are fewer stations and less competition, motorists are likely to pay more.

The undisputed winner is the taxman. Duty went up 1p a litre on April 1 last year followed by a further 1p a litre rise on October 1.

A 0.76p rise in duty on January 1 this year was rapidly followed on January 4 by the 2.5 percentage point increase in VAT – which is payable on both the duty and fuel – bringing the duty up to 58.95p a litre.

On March 23, the Government announced an immediate 1p a litre cut in the duty for both petrol and diesel in the Budget to bring it down to 57.95p a litre.

At the same time it announced a 'fair fuel stabiliser' policy, a complex formula designed to ensure that petrol does not suddenly become unaffordable if oil prices soar unexpectedly.

When the price of oil rises above a target price fuel duty will increase by no more than the rate of inflation. But when it drops below a certain level, duty may increase to pay for any 'subsidy' for the higher prices.

The small print, such as the all-important price benchmark, have yet to be sorted out and the policy will not come into force until January 1 next year.

The way you drive has a huge impact on how much fuel is burnt and sensible motoring can cut bills by as much as half.

Professor Stephen Glaister, a director of the RAC Foundation, says: 'There are a number of fuel-saving measures to observe. Stick to the speed limit. Bombing down the motorway at 80mph can use 20 per cent more fuel than going at 70mph. Drive more smoothly and change gear earlier. Turn the engine off when stuck in a jam or waiting to pick someone up.'

Another way to cut your fuel bill by up to three per cent is ensuring that the vehicle has correct tyre pressure. Lower pressure increases the drag, burning more fuel. Air conditioning also gobbles fuel, although opening windows can substantially increase drag.


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