Morrisons has announced a cut in price of petrol to a maximum of 99.7p per litre at all of its forecourts from today.
The supermarket giant is the first to reduce the price of petrol below the £1 threshold since oil crashed last month and the coronavirus pandemic struck Europe – and it marks the first time fuel has been ‘sold nationally’ for less than £1 per litre since February 2016.
Diesel prices have also been reduced, with drivers paying no more than 104.7p-a-litre at any of Morrisons’ 337 filling stations across the country.
Finally, £1-a-litre for petrol: Morrisons has announced it will reduce the price of its petrol to a maximum of 99.7p per litre at its UK forecourts from today
Government figures show the average cost per litre and petrol and diesel on 4 May was 107.6p and 114.9p respectively.
Ashley Myers, head of Morrisons fuel, said: ‘This cut will help people who are travelling to work, those shopping for essentials, and those assisting the elderly and vulnerable.
‘We want to play our full part in reducing the cost of living and feeding the nation at this difficult time.’
The cuts by Morrisons means filling a 55-litre family car with a petrol engine is around £7 cheaper than it was when the nation first went into lockdown seven weeks ago.
The news comes as the Government announced it would begin the first phase of dialling down the coronavirus lockdown from Wednesday, with those who are unable to work from home being allowed to travel to their places of employment.
Prime Minister Boris Johnson urged these workers to avoid public transport if at all possible, recommending they drive, cycle or walk instead.
People will also be allowed to driver as far as they want to in order to exercise with members of their own household from Wednesday, with visits to to parks or beaches in England given the green light.
Supermarket fuel retailers last cut the price of petrol to less than £1-a-litre in February 2016
While the supermarket’s price cut will be welcomed by motorists, it has come some six weeks after the first UK independent filling station – a Murco forecourt on the A435 between Kings Heath and the Maypole outside Birmingham – cut the price of unleaded below £1-a-litre on 26 March.
Experts claim major retailers haven’t cut prices to a similar level in the last six weeks as part of an effort to not tempt drivers to use their vehicles.
‘The AA understands that lower fuel sales, and worries that slashing pump prices during lockdown might encourage people to make non-essential trips, had pressured fuel retailers to keep the cost of petrol and diesel higher than normal,’ says Luke Bosdet, the AA’s spokesman on fuel prices’
‘However, there was evidence that this didn’t always ring true, with a 10p-a-litre mark-up on average pump prices questionable and average fuel costs in predominantly rural areas significantly lower than in heavily populated parts.’
Rival supermarket retailers are now expected to match the cuts as part of a fresh fuel price war as demand begins to increase.
UK drivers have seen petrol below £1-a-litre only once since the 2008/2009 financial crash.
That came at the end of 2015 and early 2016 when the UK average price of petrol fell as low as 101.80p per litre, but Asda, Morrisons and Sainsbury’s were all charging less than £1 as part of a price war to attract customers.
Simon Williams, RAC spokesman, said: ‘Although the lockdown is far from over, yesterday’s speech from the prime minister was a signal to drivers that they can begin to make more trips by car again – so credit is due to Morrisons for taking the lead and selling petrol and diesel at what is a very fair price and one that is much more reflective of what the retailer is itself paying to buy the fuel in.’
UK drivers have seen petrol below £1-a-litre at supermarkets only once since the 2008/2009 financial crash – that was at the end of 2015 and start of 2016, according to official data
However, Mr Williams warned that there is a ‘darker side’ to large price cuts like these, as they heap yet more pressure on smaller independent fuel retailers, who in some cases are already fighting for survival as a result of the coronavirus outbreak.
With road traffic volumes dropping by around 60 per cent and more during the lockdown, the lack of demand for petrol and diesel has put many independent fuel retailers – especially smaller filling stations in rural areas – at risk of closure.
Some 100 have already been shut and another 900 are at risk, according to the Petrol Retailers Association.
‘The AA understands that lower fuel sales, and worries that slashing pump prices during lockdown might encourage people to make non-essential trips, had pressured fuel retailers to keep the cost of petrol and diesel higher than normal,’ says Luke Bosdet, the AA’s spokesman on fuel prices
‘However, there was evidence that this didn’t always ring true, with a 10p-a-litre mark-up on average pump prices questionable and average fuel costs in predominantly rural areas significantly lower than in heavily populated parts. Rural fuel stations often provide a community service with their shops and people living there understand the need for them to charge more, so to find overall prices lower than in the South East was an eye-opener.
‘Drivers can only hope that Morrisons price move this morning will now break the logjam on pump prices. At least, essential workers will no longer feel penalised for having to drive to protect people and keep the country running during the lockdown.’
The reduction in the cost of fuel has been driven by a collapse in oil prices due to lower demand as global economies shut down because of the coronavirus crisis.
The price of US oil crashed into negative for the first time in history last month, with the cost of a barrel of crude delivered in May plummeting to negative $37 due to a lack of storage availability.
The price of oil has crashed in recent weeks due to oversupply and a lack of consumption due to the Covid-19 pandemic
The price of US crude delivered in May plummeted into the negative for the first time in history last month
Nosediving oil prices were the result of a production dispute between Saudi Arabia and Russia and falling demand due to restrictions of people’s movements and driving during the Covid-19 pandemic.
Saudi Arabia, which produces around 10 per cent of global supplies, decided to slash prices and ramp up production after Russia initially refused to go along with planned cuts two months ago.
When Russia, the Saudis and other allies eventually agreed to the biggest production cuts in history last week, oil rose again.
The price hovered around $31 per barrel on Monday morning.
Simon Williams warned that this could mean the four-year-low petrol price might not last as long as drivers hope.
‘It remains to be seen how long prices this low will persist for, with some early indications that wholesale petrol prices have started to rise as a result of the world oil price creeping up,’ he warned.
The UK average price for fuel stands at 108.74p per litre for petrol and 114.26ppl for diesel, according to RAC Fuel Watch – around 10p-a-litre more than Morrisons is charging from today.
Wholesale prices are stating to recover, which means petrol might not stay below £1-a-litre for long
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