Motoring Organisations welcome Supermarket Petrol Price Cuts but PRA warns of Forecourt Closures

Posted on 1 October, 2014 by Kirsten Kennedy

The supermarket price war continues to escalate with even discounters such as Aldi pledging to lower prices as a means of winning consumers to their brand. However, three members of the Big Four have identified an area in which discounters cannot compete, and hope to gain an edge by utilising this fact.

close-up of a mens hand refilling the car with a gas pump

Tesco, Sainsbury’s and Asda have all this week lowered the price of petrol and diesel in order to win back a percentage of the motoring market to their superstores. Both Sainsbury’s and Tesco have dropped up to five pence per litre for motorists filling their tanks, while Asda has cut petrol prices by one pence per litre and diesel by two pence per litre.

The AA and the RAC, two of the UK’s largest motoring organisations, welcomed the move as a positive step towards reducing the burden on the nation’s millions of drivers. Spokesman for the RAC’s fuel division, Simon Williams, praised the supermarkets for tackling the issue of fuel costs.

He said; “The wholesale price of both petrol and diesel has been low for around three months and as a result motorists have been enjoying some of the cheapest prices for over three years.

“This cut will take us to a new low, the likes of which we haven’t seen since late 2010, early 2011 when the price of petrol and diesel unfortunately jumped by 10 pence a litre in just a few months.”

The AA echoed these sentiments, pointing out that the cuts in petrol and diesel prices will prove particularly popular with families getting “back to school runs and into their autumn routines.” It also pointed out that this move would increase competition within the filling station sector, helping to keep prices low and reducing overall fuel inflation for drivers.

Unfortunately, though, the news was not welcomed by everyone, as the RMI Independent Petrol Retailers Association (PRA) believes further price cuts at supermarket filling stations could have a catastrophic impact upon small independent fuel retailers.

Last month the PRA revealed that almost 900 independent forecourts had been forced to close between 2008 and 2013, with more than a third of this number located in rural areas.

PRA head Brian Madderson pointed out that each of these forecourts would have employed around 10 people and also provided “much needed local facilities”.

He added; “Those businesses are at the heart of rural communities.

“Once they’re gone, they’re gone.”

Supermarkets have frequently used lower fuel prices to attract consumers to their stores, particularly during the recession when many admitted to making a loss on their fuel sales in order to boost in-store takings. It seems that, with the discounters snapping at their heels, this is again a tactic being employed to drive sales.

However, the more cynical analysts in the UK have theorised that the huge drop in fuel prices announced by Sainsbury’s may be a means of deflecting attention from its upcoming trading update which many believe will show further drops in sales during the past quarter.

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