Forecourt operators are warning that Asda’s announcement that it is cutting the price of petrol and diesel by 4p a litre today is a publicity stunt that could harm the wider industry by forcing rivals into unsustainable and damaging price reductions.
One petrol station owner, who wanted to remain anonymous, tells Forecourt Trader: “I’ll be cautiously watching to see where we are in a month’s time, and whether they are going to be kicking off a price war again or if this is a one-off publicity stunt.”
Another maintains that the supermarket group is acting irresponsibly “creating a race to the bottom, typical of big corporate mentality”, that could push independents out of business as they face increased labour costs this April.
“If I went to the same price, with the cost of labour, I would be losing money,” he says.
Like other supermarkets, Asda has greater buying power than most forecourt groups, and at many of its sites operates automatic forecourts which reduce labour costs.
The moves bring down prices at Asda and Asda Express branded forecourts to 131.96ppl on unleaded and 137.63p on diesel. They come on the same day that the RAC tells motorists that they should start seeing fuel prices fall from a six-month high in the next few weeks due to a “significant drop in wholesale costs”.
The price of crude oil has dropped from above $80 per barrel in mid-January to just under $70 now. In the last week a barrel has averaged $69 – the first time it has hit such a low price since August 2021.
The RAC says in fact that prices at the pump should come down by at least 6p a litre of petrol and 3p a litre for diesel, from their current averages of 138.98p and 145.79p.
The reduction by Asda is the largest by the multiple since 2022, and the single biggest overnight cut by any fuel retailer this year. It comes amid declining grocery sales and market share for the business.
The Petrol Retailers Association chief executive Gordon Balmer says that petrol retailers need to strike a balance between reflecting wholesale price changes and making enough margin.
“Global events are driving a drop in oil prices and those retailers that can drop their pump prices will do so. Petrol retailers are operating in a highly competitive market and must also contend with surges in fixed costs like business rates and National Insurance,” he says.
RAC head of policy Simon Williams, says: “It’s great to see Asda leading the way once again with a serious price cut on its forecourts, following our call for retailers to pass on savings from lower wholesale costs. This should spark others into action and help bring down costs for drivers right across the country.
“The longer oil keeps trading around the $70 mark, the more likely we are to see petrol hit its lowest price in four years. We’re currently at an average of just under 139p for petrol and 145.5p for diesel, with both down a penny since the start of the month, but now we should really start to see that fall accelerate.”
But could the motorist end up benefitting longer term? Not all are convinced. “Independents make up two-thirds of the market and when they are gone there will be nothing stopping supermarkets from charging what they want,” says one independent operator.
