Supermarkets cut the prices of petrol and diesel, but is cheaper really better?
Sainsbury’s, Tesco and Asda have ramped up the supermarket price war by confirming they are to drop prices from Tuesday 8th October 2014. Both Tesco and Sainsbury have confirmed a drop of up to five pence per litre, whilst Asda said it would reduce its petrol prices by one pence and diesel by two.
The news has been welcomed by motoring organisation The AA and The RAC but trade associations representing independent fuel retailers hit out saying that the move by supermarkets would only further endanger local petrol stations as prices hit three year lows.
RAC fuel spokesman Simon Williams said the price of both petrol and diesel had “been low for around three months” and that motorists have already been enjoying “some of the cheapest prices for over three years”.
Williams added: “the latest price cuts 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”.
A spokesman for the AA, Luke Bosdet, echoed those sentiments, saying the cuts were “particularly welcome as families get back to school runs and into their autumn routines”.
The head of the RMI Independent Petrol Retailers Association (PRA), Brian Madderson, told the BBC the supermarkets’ latest move would deliver yet another blow to local filling stations, which have been struggling to survive in recent years.
Last week, the PRA said almost 900 independent forecourts had closed between 2008 and 2013, more than a third of which were in rural areas.
“Those businesses are at the heart of rural communities,” Mr Madderson said, adding that they tend to employ up to 10 people, and offer “much needed local facilities”.
“Once they’re gone, they’re gone,”
But have the PRA and consumers missed a trick here? With supermarkets in an all-out price war, extending to their petrol pumps is cheapest really the best move?
According to Experian Catalist and Arval UK Ltd latest figures for September 2014, supermarket prices for unleaded have fallen to 127.6 ppl. The gap between supermarket prices and the UK average for unleaded remains at 1.6 pence per litre.
If we take Sainsbury’s and Tesco price drop promise and add three pence to Septembers average figures you could save 4.6ppl but are you really saving anything?
I ask this because for the past month I have been undertaking an experiment after an insider told me that you may find that even if you pay 5 pence a litre less at supermarkets you will actually make no savings. This got me interested so over four vehicles I tested this theory by using supermarket fuel only for a week and then non supermarket fuel the following week.
This was a crude test based on miles per gallon (MPG), price per litre and total mileage covered on a tank of fuel. The results were staggering. The test was based on using supermarket diesel from Tesco, Sainsbury and Asda and using non supermarket diesel from Shell, BP and Texaco.
Buying £85.00 of diesel from supermarkets for £1.30 per litre saved on aveage 5 pence per litre, but the average MPG and mileage rang was much lower than when using other supplies.
Even though the average price for non-supermarket diesel was £1.35 per litre, the MPG and range significantly increased when I opted not to refuel at a supermarket. When you consider buying £85.00 of fuel which is 5 pence per litre cheaper only buys you an extra 2.42 litres, so I was shocked at just how further the vehicles were travelling on one tank of fuel.
When using the supermarkets fuel my vehicle travelled between 500 to 550 miles before the 50 mile fuel warning light came on. Yet, when I used non-supermarket fuel the range increased to 610 to 665 miles before the 50 mile warning light came on.
For an extra £3.14 my vehicle travelled an extra 110 to 115 miles, saving me around £15.00 when deducting the original extra outlay. I also found after a week not using supermarket fuel my vehicle seemed to be running more smoothly and quietly and with two to three fuel stops required a week that could see me save £30-45.00 per week or £1,560 to £2,340 per year.
It’s not scientific what I have done, but during my month long test I asked other people to try out my theory and they all seemed to agree that less money at the pump equals less miles per gallon.
Why is it that supermarkets may be cheaper but the results of our test are less favourable? The answer may lie in the quality of fuel used by supermarkets and the fact it may be of a lesser grade. The other suggestion given to me is that supermarkets also use winter fuel in the summer which is obviously cheaper to buy but as the name suggests is made to work more efficiently in colder weather.
Why not take the test yourself and see for yourself that you may save more by actually spending a little more at the pump and along the way support local independent forecourts. A win, win.