Pump it up! Cheaper petrol on the way

Great news for drivers – the price of filling up with fuel is on its way down thanks to a supermarket price war. Asda, Sainsbury’s and Tesco have locked horns once more and cut petrol and diesel prices in a bid to win your custom – so how much can you expect to pay next time you refuel?
Long Queues at Petrol Stations and Panic Buying ahead of Possible Driver Strike

How the petrol price cuts measure up

Sainsbury’s and Tesco have each cut the cost of petrol by 2p per litre and of diesel by 1p per litre, while Asda has opted for a price cap that will see customers pay no more than 124.7p per litre of petrol and 128.7p per litre of diesel – its lowest price since January 2011. So how have the supermarkets been able to cut costs at a time when experts are predicting widespread oil price increases?

Global issues

Widespread shale oil extraction in the US has led to the market becoming less reliant on importing oil from the Middle East, providing scope for price cuts. As a result, ongoing political troubles there and in Russia and Eastern Europe haven’t caused the supply issues that many feared. A stronger pound has also helped to keep wholesale prices down for UK importers, and it seems this reduction is finally being passed straight on to customers. It’s also the case that supermarkets sometimes use fuel as a loss leader to get people into the stores and buying groceries and other goods.

Fuel companies

As yet it’s uncertain whether the main petrol providers, such as Shell and BP, will join in the price war – which means there could be a return to the fuel pump postcode lottery we saw last summer.
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But remember, driving out of your way to save a few pence per litre at the pumps can end up costing you more.

Follow the 2-for-1 rule

Last summer, MoneySuperMarket produced the ‘Focus on Fuel’ report and found almost four-in-every-ten motorists took a lengthy detour on their usual route to save a penny on a litre of fuel, meaning they could be wasting around £8 per month on petrol and as much as £21 per month on diesel. So if you’re looking for cheaper petrol, always keep the ‘2-for-1 rule’ in mind and never travel more than two miles to save 1p on a litre of fuel as that is the point when going out of your way for a saving becomes a false economy. If you want to work out whether cheaper fuel is putting you out of pocket, check out our handy Fuel Cost Calculator. And remember that paying less at the pumps is just one way to cut running costs. For more ideas check out Jess Bown’s article, How to beat any fuel price hikes.
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