Experts predicted fuel prices would fall following coronavirus outbreak in China – and Asda has been the first retailer to respond.
The supermarket has cut pump prices for both petrol and diesel by 3p-a-litre effective from today, meaning drivers filling up at any of Asda’s 322 fuel stations will pay no more than 120.7p a litre for unleaded and 124.7p for diesel.
The virus sparked a barrel of crude to fall below $60 a barrel last Friday as the amount of oil used by China – the world’s second largest oil consumer – plummeted due to people restricting their travel plans.
Asda axe: The supermarket has confirmed on Wednesday that it has cut the price of petrol and diesel by 3p a litre with immediate effect
Asda’s move to slice pump prices is the first significant reduction at the pumps in 2020 and comes just weeks after experts feared soaring prices were on the cards.
The price of fuel has risen in January following the end of Christmas promotions offered by supermarket retailers and rising tensions between the US and Iran forcing oil prices higher.
Average pump prices had been at their highest for a January since 2014 and, despite wholesale costs declining over the past two to three weeks, they have stayed stubbornly above 128p a litre for petrol and 132.5p for diesel.
However, the outbreak of coronavirus in China has since halted the rise in costs for motorists and seen oil fall below $60 a barrel for the first time since October 2019.
Dave Tyrer, Asda’s senior fuel buyer, said: ‘We’re pleased to be dropping fuel prices for the first time this year.
‘January has been a tough month for motorists so we’re glad to be dropping the cost in line with falling wholesale markets.
‘We will continue to put the savings straight back into drivers pockets without any vouchering requirements meaning all our customers, regardless of their budget, will benefit from a price cut at the pumps.’
A drop in demand from China – the world’s second biggest oil consumer – has seen wholesale costs for fuel retailers fall in the last week. It has taken until today for prices to be cut
The remaining big four supermarkets – Morrisons, Sainsbury’s and Tesco – are expected to follow suit with similar fuel reductions.
Luke Bosdet, the AA’s fuel price spokesman, welcomed the cuts and lavished praise on Asda for taking the first step to slash costs for motorists.
‘This new price cut is in line with wholesale petrol falling from an average of 39.4p a litre in early January to the 37p between Wednesday and Friday last week.
‘Sadly, only communities with an Asda fuel presence are likely to enjoy £1.50 being slashed off the cost of a tank of fuel overnight.
‘Instead, two other major supermarkets have gone back down the fuel voucher route, tying savings of 5p a litre to spends of £40 to £50.
‘Once again, if you’re on a low income and your spending power isn’t up to it, you miss out.
‘Given the time of year with customers trying to pay off Christmas debts and fuel costs falling dramatically, that discrimination is quite simply mean.’
The virus sparked a barrel of crude to fall below $60 a barrel last Friday for the first time in almost three months
Retailers quick to pass on increases…
While Asda should be commended for regularly being the first to cut prices when wholesale costs have fallen and stayed lower for a consistent period, like other retailers it’s quick to respond the increasing wholesale prices by immediately hiking forecourt fees.
For example, the average price of oil dipped below $60 a barrel on Friday, though it has taken another five days until motorists have started to see the impact of this at the pumps.
And the RAC claims there was scope for prices could be cut by more than 3p-a-litre.
Reacting to lower oil prices, it said fuel providers could trim petrol prices by 4p-a-litre in the next fortnight while diesel should come down by at least 5p-a-litre if the UK’s retailers ‘play fair with drivers’.
The RAC said there is scope for petrol to be trimmed by another 1p a litre and diesel by 2p per litre on top of the Asda cuts announced today
RAC fuel spokesman Simon Williams said: ‘Some drivers are no doubt aware that fuel prices in the UK are affected by global events, but many will be shocked to hear the coronavirus outbreak in China should lead to the price of petrol and diesel falling dramatically.
‘We urge the supermarkets, who are so influential in what drivers pay for fuel due to their massive market share, to pass on the wholesale savings they’re benefiting to motorists at the pumps, especially as they have actually increased forecourt petrol prices every day since 2 January.
‘Drivers have been unfairly punished as a result of the very short-term oil price rise caused by tensions in the Middle East.
‘It seems as though the big four supermarkets have been capitalising on this as the oil price has fallen steadily from a high of $69.82 on 6 January to $59.75 on 24 January.
‘This is the first time oil has been under $60 a barrel since 31 October 2019.’
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