Drivers benefit as cost of fuel drops

Sainsbury's and rival Asda cut the price of diesel by up to 2p a litre and unleaded petrol by a penny yesterday, while Britain's biggest petrol retailer – Tesco – cut unleaded petrol by 1p per litre, and diesel by at least 1p a litre although some sites will get a 2p a litre price cut.

The moves follow a decline in the price of Brent crude oil, which is now below 90 US dollars a barrel due to weaker global demand.

This means motorists are benefiting from some of the cheapest prices for over three years, although some of the benefit of Brent crude's recent decline has been offset by a strengthening in the US dollar.

The latest cuts have done little to help independent garage owners in Shropshire, however, whose profits remain under pressure, with many relying on their shops and garages to make up for the poor margins on fuel.

Mike Horst who runs St Martins Service Station near Oswestry, said: "We get the price in on a Monday, so if I got a load in on a Sunday and the price drops the next day, I have had fuel delivered at more than I can sell it for. I need to make what I can."

He added that some people spend more on petrol driving to forecourts than they save cost on a tank of fuel.

Supermarkets often use petrol as a loss leader, Mr Horst said, and the latest price cuts will be used to entice shoppers back from discount rivals Aldi and Lidl.

Asda, which has 232 forecourts, said its customers will pay no more than 126.7p a litre for diesel and 123.7p per litre for unleaded petrol.

The AA said a typical 50 litre tank of unleaded petrol now costs around £2.50 less than it did a year ago and a 55 litre tank of diesel is around £4 cheaper.

AA president Edmund King said: "The main reasons for the drop in prices are global supply and demand, plus supermarket discounting in the UK. To put it crudely we are swimming in oil.

"US oil output has doubled in the last six years and is running at its highest production levels for a quarter of a century. However, global demand has declined particularly as the Asian economies cool down.

"In the UK the reductions we are seeing at the pumps have also been speeded up by competing supermarket offers of discounts. Drivers haven't seen such prices since 2011 but oil prices are still volatile and more global unrest in oil producing countries can just as easily send the price spiralling again. Enjoy it while we can."