Tesco will be cutting its petrol prices by 2p, making it the second reduction in price this week. The countries most powerful petrol supplier made the decision after crude oil prices fell dramatically last week. While the fall in crude oil price is a concern for the global economy, at least it provides some good news for motorists.
The move follows other leading supermarkets who have also cut their prices twice in the last week. Independent stations are finding it hard to keep up with the supermarkets pricing. Many claim that the supermarkets promotions on petrol are get people into the stores to buy groceries and this has lead to the price difference reaching a new record level. The owners of these independent stations say they simply cannot match this loss-leading practice.
The majority of petrol stations in the UK are independent and many are represented by RMI Petrol. Brian Madderson from RMI has said, “loss-leading like this is a new behaviour for supermarket petrol stations.” He goes onto comment that, “the wholesale prices are still higher than expected given the fall in the cost of crude oil. This is very confusing and we have requested the government investigate this.”
RMI has stated that rural stations cannot afford to compete with the supermarkets and are having to close down; this has lead to long distances between petrol stations. In the last thirteen years over 6,000 forecourts have been forced to close as they cannot afford to compete with supermarkets.
Crude oil slumped from $117 to $103 last week, eventually ending the week at $108. The AA has stated that the lowering of petrol prices by Tesco and other supermarkets is beneficial for the UK consumer as they encourage price drops across the UK.