/ Money, Motoring

Why do petrol prices vary so much in your local area?

Filling petrol tank

The price of petrol is on the way up again, with some close to £1.40 a litre – and more increases in the pipeline. But not only are prices high, they can change dramatically in the space of just a couple of streets.

Are drivers really expected to drive around from pump to pump to find the cheapest petrol?

In the area where I live it’s common to find the same brand of petrol at widely different prices, even in similar towns just a few miles apart. Why is this?

It clearly makes sense for us to ‘vote with our feet’ – or rather our cars – and reward the cheaper filling station with our business. But given that petrol is pretty much the same thing wherever we fill up, how can the price vary so significantly locally, regionally or nationally, and even by brand?

Why such different prices?

Petrol firms claim that such differences reflect market forces. Petrol is likely to be more expensive where competition is weaker, and cheaper where there’s more choice. That, they say, is why petrol is so much more expensive in isolated rural communities.

However, even though the vast bulk of the cost is tax (fuel duty), prices are still unfairly high in places even where competition is supposedly strong.

Have you noticed much difference in the cost of petrol at different stations where you live? Do you purposefully drive to the cheapest station – or do you think that competition drives prices down in your area?

Comments

I live in the wilds of Norfolk, where there seems to be a ‘cartel’ between the filling stations. The nearest Tesco reflects the price charged by the local garages, and thus offers no savings. A rival supermarket is a 12.5 mile drive away, but its prices are generally one or two pence cheaper. However, the idea of driving to buy cheaper fuel seems a nonsense to me – it’s entirely self defeating taking a round trip of 25 miles or so just to save 50p.

What does need looking at is the fact that filling station prices in the UK have not reduced in line with the drop in wholesale prices. It seems the petrol companies have chosen not to pass on the savings.

I always check out ww.petrolprices.com, as they compare prices at all my local filling stations, and I “vote with my feet” providing the price differential is worth it. However I still believe the petrol companies are profiteering at the expense of the motorist. Their profits seem to increase year on year whatever the situation. The most infuriating thing to me is when oil prices increase, the price of petrol goes up without exception, however when oil prices go down, we’re told the price of oil has little to do with petrol price! The petrol companies also appear to be following a strategy of increasing and decreasing prices by small amounts on a regular basis, so that motorists no longer have a clear idea of what a fair price should be, or how much the price has in fact crept up.

A side effect of the increasing cost of fuel has been cost to me of work miles in my personal vehicle.

5 years ago when I joined this company diesel was at about 85p/l, the AA were estimating my running costs on my vehicle at about 42p/mile. My company paid the tax limit of 40p/mile and I was happy since I bought my vehicle used and considered my costs somewhat lower.

Now diesel is approaching 140p/mile my costs are estimated nearer 50p/mile yet company refuses to review remuneration since it is at the government tax limit already. I estimate this change in price is costing me ~£1000p.a. more now than when I started this employment on work miles alone. If anyone has successfully approached their employer to get an adjustment on this I’d love to hear about it

Oldgamer says:
18 February 2011

Absolutely agree, this is another form of less visible vehicle taxation that effectively means that workers are actually subsiding their own employers. Naturally employers wont complain and its going to get worse unless consumers start to lobby. This looks like a good candidate for a Which? led publicity campaign.

Colin says:
6 November 2011

Don’t know if this helps or not but the government raised the mileage rate to 45p from April 11 so your employer can pay that without any tax consequences. Alternatively if you keep a log of your business mileage you can claim back the tax on the difference by completing form P87 or the relevant bit of your tax return if you complete a Self Assessment form.

All the best

I am in Aylesbury, it used to be the cheapest petrol and on the news often. Then the private garage sold out to the big boys.

The nearby towns have petrol usually about 5p per litre cheaper, Milton Keynes, High Wycombe, Watford and even Luton.

What is the factor?

We have two Tescos – in a small town and the majors match them – but there is no incentive to offer locals a bargain price. Tesco price match, but the local distance means it is with each other only!

ALL the other towns have an Asda and it has forced price and competition down, even matched by local stations and Tesco!

Aylesbury is campaigning to get an Asda.

If you want to save your money in this financial crisis, use Asda. Petrol and food prices are cheaper than other stores.
Americans are very clever to keep affordable prices. They try their best to keep their customers come again and again .
Petrol prices are vary so much in every local area because they learned the bad lesson from Government. If Govt. sucks the easy money out of drivers, they can also do it.
Why Govt has not thought about watchdog for petrol pump stations ?
They have OFGEM, OFCOM, FSA so why they do not have for filling stations ?
Answer: Petrol station is full of treasure of coins for them !…….Every few seconds money is flooding in treasury to keep their wages intact !………and we all have to suffer with limited means.

‘If you want to save your money in this financial crisis, use Asda. Petrol and food prices are cheaper than other stores.’

All very well if you live near an Asda. My nearest supermarket is four miles away, Tesco. The nearest after that, Sainsbury’s is 12, and the nearest Asda is probably 20.

I use the Petrolprices.com emails to find the best price but it doesn’t help a great deal since the prices in this area of Surrey do not often vary by more than one p. anyway. Equally, if you go to fill up more than a day after the date on which the prices are checked, they have already changed. Usually, Sainsbury’s are consistently one of the cheapest with others in the immediate vicinity slavishly following them – our Asda does not sell petrol, having a Shell station very close by.

I’m guessing I live in the same area as tosca where I’ve noticed this particular Shell filling station varies its prices almost daily but is always 1p cheaper than BP a mile up the busy dual carriageway – and it’s always more expensive at the weekend! I found it galling that the Shell station in Ashtead five miles away on a rather quieter road was selling unleaded several pence cheaper and not a supermarket in sight!

petrolhead says:
18 February 2011

Folks, it’s as simple as this. Where there is a large supermarket selling petrol they tend to drive the local price – some of the majors will price match, and some won’t (hoping that people aren’t actually bothered about the price of the petrol, which it appears that many aren’t when you look at the forecourts). Where there isn’t a supermarket, then the prices aren’t drawn down & they find their own equilibrium based upon what turnover will sustain the station (and many are going out of business as you may have heard on the radio tonight). If the local petrol station had higher volumes, then they could probably drop their price and stay in business, but in the more rural areas they don’t have the volumes so the price has to be higher, or go out of business.

‘hoping that people aren’t actually bothered about the price of the petrol, which it appears that many aren’t when you look at the forecourts’

I’d take issue with that statement. Whether people are ‘bothered’ or not is beside the point. They… we… HAVE to buy fuel, especially those of us in rural areas. The suppliers have us over a barrel, if you’ll pardon the pun. They know we can’t get by without fuel because public transport provision is poor to non-existent.

petrolhead says:
18 February 2011

the ‘not bothered’ comment was meant in relation to where there are many petrol stations – clearly where there is little choice, as in rural areas (where I also live), the comment is not pertinant

Clive says:
19 February 2011

I live in a Warwickshire village with one filling station. It’s independently owned and when I complained that his fuel was the dearest I had ever seen the owner showed me his invoices from his supplier Shell. He was actually paying more wholesale than the “Pump price” at the Shell owned filling station in Stratford-on-Avon five miles away. (Which, incidentally, is my next nearest filling station).
Perhaps more of the small local/rural filling stations are independently owned and it is the petrol companies who are getting the increased profits whilst hiding behind the local traders.

DaveB says:
19 February 2011

What get’s my goat, is that if HMG really want us to Green Up (the often qouted reason for the rise in duty each time) then they should pay us, if we are prepared to use reprocesed used cooking oil as fuel.

As to the need etc. Hear near Buckingham, the bus service is inadiquate to get into MK for work in the morning, and totally absent for getting home.

OK, so I’m part of the problem with a company car, but unless you live within walking or cycling distance of where you work, transport of some type will be needed. Sadly, HMG in the past actively encoraged mobility for work, then systematicly wrecked the public transport system. As a result, we’re stiched up now with excessive fuel prices, as for most, there is no alternative than to pay “the man” for the privilage.

As to electric or hybrid. All your doing is either moving the emissions to somewhere else, or carting arround much more weight in batteries. And that costs in fuel used.

As to ASDA, the nearest is MK, some 18 miles away by road. It’s only cheaper, as it’s pay at the pump only, and sadly they don’t accept fleet fuel cards.

Regards.

DaveB

A number of years ago I managed a Shell (City Petroleum) site in Belfast. My marker station was a BP site about 400 meters away. I had to check the BP prices morning and afternoon and when they rose or fell I would have informed the department concerned with price-matching. I would then have been instructed to ‘match their price.’ Shell never initiated price reductions. There is no doubt in my mind that a cartel does indeed exist. Why has the issue of loaded tankers (travelling at much reduced speed from the middle east to UK) not been addressed? Is it to profit / profiteer from rising wholesale prices? We are unlikely to see Government do much about it as it should be borne in mind that a retiring MP is likely to be offered a cosy seat in either an oil company or a bank. Draw your own conclusions! Expect profits in the region of £12B. this year from BP.

Lenmac says:
20 February 2011

Don’t you just love all the “pushing” for the electric cars? I well remember when going diesel for economy purposes was the way to go. Diesel fuel comes earlier in the production of petrol and subsequently is much cheaper to produce. Subsequently diesel fuel was much cheaper than petrol. What has happened in the intrim period? It was realised that cars go further on a litre of diesel fuel than petrol cars so now we pay around 5 to 7 pence more per litre than the equivalent amount of petrol even though the petrol costs more to produce.

If we all go to electric do you think that perhaps the same thing will happen to electric as happened to diesel? Another thing to consider – we have been warned by various governments that if we don’t soon build nuclear power stations then we can expect periods of blackouts across the country. What do you imagine will happen if all our transport depended on this source of energy.

There is no long term planning by anyone. It all runs on “the magic buck.”

petrolhead says:
20 February 2011

Just to explain some of the price swing – UK refiners were developed / expanded mainly to produce petrol as that was where the demand was going in the 50s/60s/70s; as the demand for diesel has grown more recently, the UK is now ‘petrol long’ and ‘diesel short’ i.e. we have to export the excess petrol, and import the diesel shortage. Pricing is based around the market price, which for these products is based in Rotterdam. So the value of petrol is the Rotterdam price, less the cost of transporting it there; for diesel it’s the price plus the cost of bringing it from Rotterdam to the UK. So, as we’ve moved from a balanced postion, petrol has effectively gone down, and diesel gone up, by the cost of the relevant freight charges. (I hope I’ve been able to explain that clearly).

The UK needs to promote growth to pay for the results of the banking crisis?
Does having the second highest diesel prices in Europe help this country to compete?
Diesel moves all bulk goods in this country, increase this cost will raise the price of just about everything.
I know that world demand will increase the price of crude oil, but why are our fuel prices the second highest in Europe?
We also have the extra expense of exporting across the channel.
In France diesel is 10p cheaper than petrol, how are British haulers to survive?
It would be fair if our fuel prices reflected the French and German prices

In scientific terms, diesel produces about 40 megajoules of energy per litre, as opposed to about 35 for petrol.
Diesel engines generate 10-20% lower CO2 emissions per mile than an equivalent petrol engine.
In addition, diesel is cheaper to make and easier to store, being less prone to evaporation.

I live in London and work in Essex. I pass 10 petrol stations every day – One a Texaco station is always the cheapest of the 10 – I would never drive say 15 to 20 miles to buy petrol at 1p a litre cheaper – that’s around 1/3rd a gallon of petrol. Two of those stations are supermarket ones – both more expensive. Except that I could save a little at Sainsburys if I did my weekly shop there – but I start at 6 am and too tired at 8pm when I come home.

I wonder how many “average” motorists actively shop around for fuel on a price basis only, or are convenience, easy access, useful shop, friendly staff just as important factors.
When you think that 1p a litre difference is probably less than 40p on the £50 cost of filling up and buys you only 3 extra miles is it worth the hassle ?

Obviously for those on very high mileages the sums encourage shopping around.

Independent says:
22 February 2011

All you motorists shopping around for cheap fuel, be warned when all your local independent retailers have been forced to close, do you really think the the supermarkets are going to sell ‘cheap fuel’. They are already selling it at a loss to get the customers into the store, because the customer perceives that all goods in the store will be cheap, and what do you do when you are running low on fuel and there is nowhere local to fill up and the nearest supermarket is several miles away. My family run an independent filling station and we cannot compete with the supermarkets on price because most of the time they are selling their fuel at less then we are paying for it. We pay for our fuel the day after delivery by direct debit, so our prices are always based on current Platts prices, the supermarkets are on one months credit, so their prices are based on what Platts prices were a few week earlier.

Big Al says:
23 February 2011

I live on the North Wilshire/Gloucestershire border where the lowest price is driven by the local Tesco but I can drive about 4 miles into Wiltshire where the local Esso Garage is always 3-4p lower and if I drive further south to Swindon the price is lower still. There used to be a garage in Cirencester that also had an outlet in Swindon and the staff always stated that they were not allowed to reduce fuel costs to match the Swindon branch because of a local cartel, of course that garage has now closed.

Denise says:
23 February 2011

I struggle to understand how there can be up to 10pence a litre difference from one Tesco store to another?!
Why can it not be the same all over the country and stop treating the punter as just a money maker.
I for one would stay loyal to the group who showed they were fair to all over the country.
Has anyone else noticed how the price increases everytime the children are off school? Even if there has been no price increases in fuel advertised!

I thought that it was worth travelling to the local Tesco to get fuel, think of all the points you get on your Tesco Card. It takes ages to get any benefit on the points earned,absolute rubbish, I go to the local garage in Evesham where they offer the “cheapest” in town up to 5.30pm. I would rather benefit from a better petrol price than give the major chain that is destroying all the smaller shops the business.