20160104 Supermarkets cut diesel price to below £1 a litre

Supermarket chain Morrisons cut diesel to below £1 a litre on Sunday – its cheapest since 2009 – and Asda, Tesco and Sainsbury’s followed on Monday.

The price of petrol, typically cheaper than diesel, fell below £1 a litre in the weeks before Christmas.

The RAC said the move was overdue.

The cut reflects further falls in the oil price, which is its lowest for 11 years. UKBrent crude oil is currently trading at just below $38 (£26) per barrel, having lost 35% over the year.

The RAC’s Fuel Watch monitors the price of oil and its relation to forecourt prices.

Most of the price of UK fuel, about 75%, goes to the Treasury in duty and VAT. The rest is refinery costs, distribution and the fuel retailers’ profit margins, leaving less of a link between the price of the commodity and the finished fuel product than may be apparent.

But the motorists’ organisation said the forecourt price should have been cut earlier as the wholesale price of diesel – which is paid by the supermarkets and fuel retailers – has been 2p lower than the wholesale price of petrol since a couple of weeks before Christmas.

It pointed out that more miles were driven in the UK on diesel than on petrol.

A spokesman said: “Diesel drivers will clearly welcome this move by the big supermarkets, although it would be fair to say it is overdue.

“We hope that other supermarkets and the cheaper fuel retailers will follow suit and do the right thing for motorists. This should reduce the average price of diesel for motorists everywhere who will benefit from the low price of crude oil.”

Morrisons, Asda and Tesco are charging charge 99.7p per litre of diesel. Sainsbury’s is charging 99.9p.

Asda, which has 277 filling stations, says it was the first to cut the price of petrol to below £1 a litre in November, as does Morrisons.

Bryan Burger, Morrisons petrol retail director, said car drivers would pay £20 less to fill up a 50 litre fuel tank compared with the high point reached in 2012.

Peter Cattell, fuel director for Tesco, which has 500 filling stations, said: “Having diesel for 99.7p a litre will give our customers a big helping hand for the new year. This reduction will mean millions of customers save money by shopping at Tesco.”

Tesco will continue to review the price of diesel subject to changes in oil markets and foreign exchange movements.