Supermarket fuels UK petrol price war

The UK petrol price war intensified today as British supermarket giant Sainsbury's announced it was cutting its forecourt prices for the second time in a week.

The supermarket chain knocked more than 2p per litre off the price of its unleaded and diesel.

The price of unleaded petrol now stands at an average of 92.9p per litre and the price of diesel has dropped to an average of 94.9p per litre.

At the end of last week Sainsbury’s was selling diesel for 98.8p per litre and unleaded for 97p.

But as a result of a slight drop in the price of crude oil they cut their prices last weekend to 97.5p per litre for diesel and 95.5p per litre for unleaded.

The move prompted two other supermarket chains to follow suit and cut the price of their petrol.

On Tuesday rival retailer Tesco knocked 2p per litre off all grades of its fuel, while Asda slashed three to four pence per litre off its unleaded petrol and 2p per litre off diesel.

Prices fell as low as $70 a barrel on Thursday, a level not seen since June 21.

The lower fuel prices will come as a huge relief to motorists who have seen the price of petrol soar to nearly £1 per litre in some parts of the UK.

However the UK's AA Motoring Trust warned that the lower prices may not last.

Paul Watters, spokesman for the trust, said the oil market was so sensitive to change that any small upset could send prices soaring again.

He said: “It is such a volatile market you cannot sit back and say things are getting better. We are not out of the woods yet.

“The trend is historically upwards. Maybe in the past it has gone higher than it should have but I do not think it will ever go back to $50 a barrel. It seems to be hovering around the $70 mark. It would just take another hurricane and petrol prices would shoot up again.

“Supplies are always vulnerable and there isn’t enough oil coming out of the ground. I would hope it isn’t a temporary dip but it’s certainly a move in the right direction.”

Mr Watters said the supermarkets are able to dictate the price of fuel because they supply the vast majority of petrol to motorists.

“It’s a very competitive market and I’m not surprised that Sainsbury’s has done this. For supermarkets fuel can be a loss leader and so it’s part of their marketing strategy that they do this. But it is putting smaller retailers out of business,” he said.

The price cuts have brought Asda’s unleaded petrol down to a new flat rate of 93.9p.

Its diesel dropped from 97.9p per litre to a flat rate of 95.9p per litre.

Tesco has a local pricing policy which means its petrol prices vary in different parts of the country.

A Sainsbury’s spokeswoman said: “We are the first supermarket to offer petrol at this price nationally.

“Once again we have moved quickly to ensure the best value for our customers who can now benefit from cheaper fuel.”