Asda and Tesco to cut diesel to under £1 barrier
Supermarket giants Asda and Tesco today announced a cut in the price of diesel.
Both will sell it for less than the symbolic £1 per litre level but motoring research charity the RAC Foundation asked why bargains had not been seen sooner and more widely.
Asda said there would be New Year cheer for drivers from Monday with a 3p per litre cut on diesel - making it the first retailer to bring diesel prices to below £1.
The company said in a statement: "Asda's national price cap will see diesel and unleaded available at the same price of 99.7ppl for the first time in over six years, across every single one of its filling stations.
"Today's announcement is welcome news for customers as they return to their regular daily commutes after the holidays and puts money back in their pockets as they recover from the cost of Christmas.
"Asda is the only retailer that has a national price cap on fuel at all 279 filling stations, ensuring every single customer knows the maximum price they will pay at the pump regardless of where they live."
Andy Peake, Asda's senior petrol director, said: "We're glad to be leading the way and investing in some New Year cheer for customers by bringing the cost of diesel to below £1 for the first time in over six years. This latest announcement shows that we're committed to being the driving force behind lowering fuel prices."
Tesco also said that from Monday the price of diesel will hit 99.7p at all of its 500 filling stations.
Peter Cattell, fuel director, said: "We know our customers really value low fuel prices and 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.
After the cut by Asda, Steve Gooding, director of the RAC Foundation, said: "It seems the January sales are extending beyond the High Street to garage forecourts.
"The question is, why haven't we seen these bargains sooner and more widely? After all the wholesale price of diesel has been below that of petrol since early December, yet the story at the pumps has been the opposite with diesel 3 or 4p a litre higher throughout that period.
"More generally low pump prices are a product of a barrel of oil changing hands for less than a third of the price it did 18 months ago."
Unleaded fell below £1 per litre at many supermarkets last month for the first time since 2009, excluding promotions.
Sainsbury's said later it was dropping the price of diesel to 99.9 pence per litre from Monday, across its 301 forecourts.
A spokesman said petrol drivers had been filling up for under £1 since December 12 and motorists with diesel cars would now join them in enjoying the lower prices.
Avishai Moor, head of fuel, said: "This is great news for diesel drivers and kicks off 2016 on a really positive note. We hope that this will help motorists to balance their budgets in the quieter period after Christmas and the New Year."
The RAC said the price cut was good news for drivers, particularly after the expense of the festive season, but it was long overdue.
RAC Fuel Watch spokesman Pete Williams said: "Diesel drivers will clearly welcome this move by the big supermarkets, although it would be fair to say it has been slow in coming.
"The wholesale price of diesel has been around two pence cheaper than the wholesale price of petrol since a couple of weeks before Christmas so we should have seen these cuts earlier and that is what the RAC has been calling for.
"We hope that other supermarkets and the cheaper fuel retailers will follow suit swiftly and do the right thing for motorists. This should reduce the average price of diesel across the UK for motorists everywhere who can then benefit from the low price of crude oil on the world commodity market.
"Saudi Arabia has also reiterated its intention not to cut oil production so the world will continue to be awash with oil as demand is also down suggesting that sustained lower petrol and diesel prices are going to be around for much of 2016.
"This is great news for consumers and motorists generally for whom the cost of motoring is one of their biggest gripes. But it will also benefit UK business which runs on diesel and should be a further stimulus to the economy.
"The lion's share of the price we pay at the pump, around 75%, goes to the Treasury in duty and VAT. The rest of the price is production, refinery costs, distribution and the fuel retailers' margins. This means that there is a limit to how low we will see the price of diesel and petrol go but prices could well continue to fall and a pump price of 90 pence a litre is not that far-fetched.
"The focus has been on the price of petrol but with more diesel sold in the UK the retailers should be more transparent and reflect the savings they are making in the wholesale price more swiftly at the pump. And right now diesel is cheaper than petrol."