A price war between the UK’s top four supermarkets is under way after Asda, Sainsbury’s, Tesco and Morrisons announced cheaper petrol.

Asda and Sainsbury’s said they would slash their petrol prices to as low as 94.9p a litre.

Tesco and Morrisons also said they would reduce their prices, while petrol company Total will follow suit.

The supermarkets have already joined battle on the issue of forecourt prices on several occasions.

‘Rip off’

Sainsbury will cut its petrol prices by 3p per litre. While its prices are locally set, it did say the majority of customers would pay 94.9p for unleaded and 106.9p for diesel.

No Sainsbury customers would pay more than 96.9p for unleaded and 107.9p for diesel, it said.

Sainsbury is supporting its announcement with a promotion offering an extra 5p off if customers spend £50 in store.

This could mean customers spend less than 90p a litre on fuel for the first time since April 2007, said the supermarket chain.

Meanwhile, Asda has said it will freeze prices in all of its 172 forecourts for 10 days, whatever the fluctuations in crude oil prices.

A litre of its petrol will now cost 94.9p, while its diesel will be 107.9p.

“It’s simply not acceptable for anyone to be paying more than £1 for a litre of petrol, no matter where they live in the UK,” said Asda trading director, Darren Blackhurst.

“If they are, they’re being ripped off whilst petrol retailers pocket the profit,” he said.

However some observers claimed that supermarkets could afford to sell petrol at a loss to try and win customers into their stores – a luxury which independent fuel retailers could not afford.

Price war

Several consumer groups welcomed the news, with AA president Edmund King saying the cuts had come at “just the right time”.

Tesco, Britain’s largest supermarket, said it would cut its fuel prices by 3p per litre at the majority of its 430 forecourts. This marks its third price cut in two weeks.

Morrisons’ price cut will be its second this week. On Monday it trimmed 2p off a litre, taking its prices down to 97.9p for unleaded and 109.9p for diesel.

Supermarkets resumed their long-running price war earlier this month after the price of oil started heading downwards, putting pressure on them to react by cutting their own prices.

The price of oil has continued to slide, despite warnings by producers’ cartel Opec that it could cut production rates to stabilise prices.

The RMI Petrol Retailers Association warned prices could rise in the near future, but said they would come down again.

“Consumers will see prices rise as we go towards Christmas, but they will actually drop further in January,” said an RMI spokesman.

He said a January drop would be due to people traditionally driving less and demand subsequently falling.

News reported by The BBC

There are more concerns over a number of world economies falling into recession, with the lastest being the US probably already in recession and Germany on the brink.

Inflation seems to be falling with world food prices dropping and the price of oil per barrel easing further this week to end at $71.75. Raw material prices, like steel, have also seen a drop as Tata cuts output at Corus this week due to weaker demand. And in the US it has seen the biggest fall in 34 years in its industrial production!

More woes for the travel industry with the Spanish airline LTE International suspending its operations this week after getting into serious financial difficulty.

The slowdown in the UK has affected retails store MFI, which is under the supervision of administrators Kroll after management took over the operations of the majority of the stores. The firm is trying to sell on the failing stores in MFI, but these will be closed if there is no buyer.

Northern Rock, is top of the “Repossession list” this week where it has seized 4,021 homes by the end of September, which has angered charities – with Shelter adding that “Shelter said repossessions should only occur if “absolute necessary” and that people should be given every assistance, including free independent advice, to help them stay in their homes. “

Good news on the petrol prices front with the price per litre falling below £1 this week when suppermarket chains Morrisons and Asda along with oil giant BP led the way when the price per litre was reduced to 99.9p.

If the oil price per barrel stays where it is, then petrol prices at the pump must come down still further – it only makes sense with the price per barrel dropping from a high of $147 to $71.75, a drop of more than 50%. So come on oil companies do your bit for the world economies, pass on the price reductions.

We also see an interesting contrast between the cola producing giants with Coca-Cola benefiting from strong demand in emerging markets, reporting a 14.5% rise in profits for the first quarter over last year. Whereas, Pepsi is cutting 3,300 jobs as their profits slide where the company saw third-quarter pre-tax profits fall 9.5% to $1.6 billion.

The world financial markets continued this week to be in turmoil with huge falls on the stock markets follwed by large increases too. The Dow Jones fell by 733 points overnight from a rally to 9,311 earlier in the week to close at 8,852 at the end of the week, which is up on the close from last week by 4.74%. The UK’s FTSE 100 saw similar volatility seeing large fluctuations in the week and ending up 3.3%.

End of the week saw:
Stock exchanges:
FTSE 100: 4,063
DOW: 8,852
S&P: 941
Nikkei: 8,694

Currencies
UK Sterling £ to US Dollar $ 1.73055
UK Sterling £ to Euro € 1.28542
UK Sterling £ to Aus $ 2.51025
US Dollar $ to Euro € 0.74278

Commodities
Crude oil – $71.75
Gold – 785.30

Supermarket chains Asda and Morrison’s and oil giant BP have cut the price of petrol to below £1 for the first time since December last year.

They are now selling unleaded petrol at 99.9 pence per litre and also cutting the price of diesel, as the price of oil falls.

BP has said the new price would apply “at a number” of its outlets.

The supermarket group Sainsbury’s has also said it will now cut its forecourt petrol prices on Thursday.

A barrel of oil has fallen from a high of around $147 in July to less than $80, and the firms said they were passing this drop on to customers.

The average price of unleaded petrol in the UK is currently around 117p.

‘Welcome boost’

“We’re taking the lead again in cutting fuel prices and taking unleaded back below a pound a litre,” said Morrisons’ chief executive Marc Bolland.

“This is strong support for the millions of motorists that are served at our forecourts.”

“With the economic situation looking the way it is, I don’t think we have seen the bottom yet” Damien Cox, John Hall Associates

Asda said the move would be a “welcome boost for consumers at a time of economic gloom and high inflation”.

“This reduction will come as a relief to road users,” a spokeswoman said.

BP said the new petrol price would apply at “a number” of its petrol stations, but added it aimed to remain “as competitve as possible”.

Back in July, UK fuel prices hit record highs on the back of crude oil also hitting all-time peaks.

Petrol prices touched 119.7p a litre and diesel went as high as 133.25p.

Last week, Tesco sparked a new round of price cuts after slashing prices by 3p a litre at its 430 forecourts.

But there has been criticism that the petrol retailers have not been quick enough to cut their prices.

Prime Minister Gordon Brown has said he wants the drop in oil prices to be passed on to consumers “as quickly as possible”.

Regional differences

Analysts expect further price falls at the pump in the coming months.

“With the economic situation looking the way it is, I don’t think we have seen the bottom yet. There’s still a little bit to come out of this,” said Damien Cox, senior analyst at energy adviser John Hall Associates.

RAC motoring strategist Adrian Tink said that the higher prices had seen the average motorist spending £1,300 a year filling their fuel tank.

“At least that figure should start to come down now and motorists will see a significant difference in their wallet when they next visit the forecourt,” Mr Tink said.

He added that there were often “huge” differences in price, depending on region.

“We are calling on all retailers across the country to get their petrol prices under the £1 barrier quickly to help Britain’s beleaguered motorists.”

News reported by The BBC

We have seen a dramatic fall in oil prices since July 2008 where the Dollar price per barrel was $147 and today the figure is just under $78!

However, as Virgin Atlantic announces that it is to reduce its fuel surcharges on flights for most passengers in response to a fall in the price of oil, we can see that these reductions are in no way as bigger a percentage as the fall in the price per barrel.

Virgin’s surcharges for its economy passengers shorter-hall routes will be cut by £10 to £68 from £78 (12.8% cut) and on their long-haul routes economy charges will drop from £109 to £96, which represents a fall of 11.9%.

This is by no means the fault of Virgin, as they are more than likely being charged by the oil companies for their fuel at a still comparatively high rate, despite the fall of nearly 47% on the price of crude. This is also the case at the pumps across the UK, which have seen a fall in recent weeks, but not to the same extent as crude oil prices – even Gordon Brown has called for a cut in petol prices.

Gordon Brown has called for the recent falls in the price of oil to be passed on to UK consumers.

The price of oil has plummeted – from a high of $147 a barrel for US light crude this summer to $77.99 on Friday.

The prime minister said: “I want these price cuts passed onto the consumer, and passed on as quickly as possible.”

The price of oil has been falling due to increasing concerns that the economic slowdown will lead to a fall in global demand for the commodity.

Price cuts

Already, some supermarkets – from whom other fuel retailers take their lead – have cut prices.

Tesco announced on Friday it was cutting petrol and diesel prices by 3 pence a litre, with immediate effect. Asda cut its prices by a penny last week.

Morrisons has cut prices by five times since July, with the latest drop just last week, a spokesperson said. “When the cost of crude oil and refined product falls, we pass the benefits on to our customers as quickly as possible,” the company said.

“Asda has been the real trail blazer [in reducing prices], with Morrisons to a lesser degree,” said Luke Bosdet, spokesman for the AA, adding: “Reductions in the price of oil are not passed on as quickly as they could be.”

Ray Holloway, director of the RMI Petrol Retailers Association, suggested that it is the prime minister himself who makes the real difference to prices. “Gordon Brown always has the ability to reduce fuel prices through a fuel tax reduction, but avoids it,” he said.

Demand ‘slow’

The prime minister’s statement comes on the same day that the International Energy Agency (IEA) cut its forecast for oil demand growth to its lowest level for 15 years.

“Although non-OECD slowdown is also likely, it is by no means certain that growth will be choked off altogether” International Energy Agency

It cited economic weakness and “a liquidity crisis” as the reasons.

The IEA has reduced its 2008 forecast by 250,000 barrels per day, to 440,000 barrels, and its 2009 estimate by 190,000, to 690,000 barrels per day.

US light crude was down $4.09 at $82.53 a barrel on the news while London Brent crude fell $3.84 to $79.18 a barrel.

Lack of liquidity

The Paris-based agency blamed global economic weakness and, in particular, the lack of liquidity in world markets resulting from the current financial crisis, for the drop in demand.

The impact of this weakness, it said, was being felt most acutely in developed countries, with developing economies showing “a degree of resilience”.

“Although non-OECD slowdown is also likely, it is by no means certain that growth will be choked off altogether. We have yet to see unambiguous evidence of a sharp slowdown in China, while Middle Eastern demand growth remains robust,” the agency said.

Falling demand among developed economies has seen the price of oil fall dramatically from its summer highs. US light crude hit a June high of $147 a barrel.

Supply lines

The IEA said the credit crisis was also hitting supply, as it made it difficult for companies to raise money to invest in the industry.

“Credit shortages are rapidly becoming yet another in a long line of impediments to industry investment,” the agency said.

Oil producing cartel Opec agreed in September to strict output targets that have so far reduced output by 300,000 barrels a day, “largely due to unplanned outages”, according to the IEA.

Global oil supply fell by 1.1m barrels a day in September.

However, it is in the interests of Opec to cut supply in order to put upward pressure on the oil price. If supply falls sufficiently, then oil prices will stabilise.

Opec has called an extraordinary meeting on 18 November in Vienna to discuss “the global financial crisis, the world economic situation and the impacts on the oil market.”

News reported by The BBC

Petrol prices are falling but not fast enough in response to dropping oil prices, according to the AA.

Oil prices fell to a three-month low on Tuesday, with US crude down to $118 a barrel at one point.

The AA said prices at the pumps had come down in recent weeks and petrol was at an average of 115p a litre but could be cut further.

Retailers said that the volatility in the market meant that oil price changes were not immediately reflected.

Latest prices

Analysts said that rising supply and slowing demand were reducing the price of oil, having peaked at $147 a barrel on 11 July.

“Any pump price above £1 per litre causes hardship and misery for many millions of car dependent motorists” Edmund King, AA president

The AA says that a $2 fall in the price of a barrel should be reflected in a 1p fall at the pumps. This would be the equivalent of prices dropping by 14p from the peak to the latest low.

But the motoring organisation said that a lack of transparency in pricing meant that it was very difficult to tell whether motorists were getting a fair deal.

An AA spokesman said retailers were cutting prices “selectively and not quickly enough”.

On Monday, the average price of petrol was 115p a litre, and diesel cost 128p a litre, according to figures from the AA and Experian Catalist.

“Any pump price above £1 per litre causes hardship and misery for many millions of car dependent motorists,” said AA president Edmund King.

“Already 55% of AA members have cut back on journeys due to prices at the pumps and others are sticking to speed limits and eco driving to make their expensive fuel go further.”

Volatile market

Experian Catalist said that the price of petrol on Monday had dropped by 2p and diesel by nearly 3p a litre compared with a week earlier. Petrol was down by 4.5p compared with a peak on 17 July and diesel by nearly 5p over the same period.

A tussle over prices by the supermarkets was in evidence during the latest cuts in price.

“We continue to review prices daily and we reduced petrol by up to 3p and diesel by up to 4p at the end of last week to ensure we provide customers with the best possible value for their fuel on a local basis,” said a spokesman for Sainsbury.

An Asda spokesman said its stores across the country had also cut prices in the last two weeks and had a “watching brief” regarding the latest oil price dips.

Representatives of rival Tesco also said prices had fallen but a spokesman stressed that oil prices needed to show a sustained fall in what was a volatile market.

An AA spokesman accepted that there were a number of factors that affected the cost of petrol and that a cushion was needed against the volatility of the cost of oil.

News reported by The BBC