Asda and Sainsburys embroiled in fuel price war, cutting 2p per litre from tomorrow

Both Asda and Sainsbury’s are cutting the price of petrol and diesel by up to two pence per litre from tomorrow as the supermarkets compete to win customers from their rivals.

Asda has announced that, from tomorrow, customers will pay no more than 130.7p a litre for petrol and no more than 134.7p a litre on diesel. This nationwide cut will, in the words of its petrol trading director Andy Peake, mean that nobody will be forced to pay a premium for their fuel because of where they live.

AA president Edmund King welcomed the competition, noting that prices of both petrol and diesel went up by around 1p a litre last month.

Our June fuel price report revealed that retailers had on average this year been charging at least a 1p per litre extra on diesel. Hence we believe that all retailers should look to cut fuel prices to reflect the market price at the pumps. For the past six weeks, retailers have been paying 2p-3p more a litre for diesel compared to petrol.

Yet, when they sell it to drivers, diesel is typically around 4p more expensive than petrol. The AA advices that diesel prices vary locally more than petrol so drivers should search out diesel-friendlier forecourts.

King has been outspoken on the issue in a past, saying that the premium being levied on diesel fuel means motorists would have to travel an additional 5,500 miles for the efficiency of diesel to break even with the extra costs.

Meanwhile, the European Commission is currently investigating a number of companies over potential price-fixing. Three of the largest oil exporters in the world - Shell, BP and Statoil - as well as price benchmarker Platts are all being investigated. Even if any evidence is turned up, however, it could be years before it's found.

See here for the Wall Street Journal's in-depth explanation of oil price benchmarking and how this could be manipulated.

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