/ 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

A price is invariably set at a level the punter is prepared to pay.
If you think any particular fuel outlet is taking advantage don’t use them. They only get away with it because we the stupid motoring public actually pay up.
The real issue with fuel price is not the few pence per litre difference garage to garage it is the massive taxation on fuel.
If we were only paying say 35p to 50p per litre, the actual price of the fuel before tax, but including retailers profit this wouldn’t be such an issue. In reality the additional sum (taking us to around £1.30 currently) in the form of fuel tax and VAT is what makes every trip to fill up so painful.

So who is the real villain here HMRC or the fuel company?
I know who is taking by far the most of my money.

Estrith says:
26 February 2011

In my area(south Cambridgeshire) BP petrol stations have the highest prices. I wonder if this has anything to do with BP’s participation in the Nectar rewards scheme.

I really believe in getting smart not angry – so its important that we provoke Which?? Into action
Rather than hosting another angry chat.

As per the very first comment. It seems to me petrol stations prices operate as unspoken cartels, they adopt a strategy of price leadership, where bp for example, charges 1.35, and all others agree (silently of course), to charge just under or just over this amount. This way all make a decent profit and the giants do not have to flex their awesome power and starve the independents (as long as they stay in line).

In order to appear legal, they do however compete on merchandising & marketing – free cups, discounted torches etc as this is very cheap for them and effective. You can often recognise oligopolistic (near monopoly) behaviour as you will seldom see volume offers (ie can you ever remember a petrol station promoting a discount on a full tank?) Whilst the supermarkets work on the more you buy or 2 for one etc etc.

Now, the argument for diesel being significantly more expensive than petrol! – this pricing strategy is unique to the uk! All other european countries charge less for diesel than petrol! – why – because diesel runs commerce on which we depend, and of course because diesel costs less to refine/produce than petrol ( less energy as it comes from lower down the fractionating tower) – but when did any of our governments follow logic and decency? – they make a fortune in petrol taxation which they add to our other myriad of taxes.

Which? Presented a 2 page article last year on why diesel was higher than petrol – a frustrating article because Which?? Allowed oil industry spokesmen to give the most absurd, implausible excuses without so much as a challenge – the main reason cited for this uk phenomenon was that the British oil industry had not yet altered its production ratios to stay in line with the increased demand for diesel !!!! – can you imagine a supermarket chain saying we havn’t got enough shelf space for white bread so we’ll charge more for white than brown.

Come on Which? Take your gloves off! Help do something about the this massive rip off that is crippling uk competitiveness and trade.

If the British consumer was not so apathetic and simply exhausted with sheer volume of economic abuse heralded by so called ‘free market’ and ‘privatisation’ controlled by powerless timid watchdogs, they ( the consumer ) could solve the problem in no time. Simply boycott bp/esso for 3 months ( however inconvenient to you), and the consumer would establish a principle that would make the banks, supermarkets, utility companies quake in their boots!

If you don’t believe in ‘getting angry’, why are ‘shouting’ throughout your post?

petrolhead says:
27 February 2011

The difference between a supermarket putting in more shelves & a refinery significantly changing its diesel/petrol production is that it costs several hundred million pounds to install the necessary kit, and it’s simply not justified. (You may not know it but most of the UK refineries are currently up for sale as they do not make enough money to support long term operation. I know that won’t gain much sympathy in this thread, but it is current reality; and if some do shut down then the prices will go even higher !)

There are two Morrisons in Darlington. The one in the fringe of town shopping park is always 1p dearer than the older site 2.5miles away. Until recently Darlington petrol has always been cheaper than on Teesside 11 miles closer to the tank farms but recent price hikes have equalised prices and ASDA is no longer the cheapest.

Dear Zoe
Thank you for your helpful comment; I tried, dispassionately I assure you, to outline my perception of what is happening, then attempted to galvanise the Consumer Association into less talk more action and finally, offered a simple action that we could all practise/circulate/support that could stop us being continual victims and prove the notion that the Customer can be King.
and your point was?

My point, VF, was your use of caps. Internet protocol says that use of caps is ‘shouting’, and I reacted accordingly. While I applaud your passion, and your commitment to the cause, I felt the caps detracted from what you were saying. If only the customer could be king, but as someone else pointed out, the rise and rise of supermarket petrol stations has meant the closure of independent locals, so many of us, especially in rural areas, simply have no choice. There is no Esso station I can boycott, no BP station.

VF says:
2 March 2011

Hi Petrolhead, thats an interesting insight; I didn’t know that refineries were in this
predicament.I assume they are owned either by the Petrol Companies or intermediaries?
I suspect this is because, they are at the end of their life and need
replacing as a result of continuous lack of investment.
My only observations would be:
Given the lucrative nature of the market, are the Fuel companies going ignore
the refineries position and cut of their source of earnings?
The Fact still remains that DIESEL being heavier than Petrol requires LESS refining
therefore less Energy and shorter production time. This must means it costs to produce,
so WHY is it more expensive than Petrol?

If Commercial vehicles essentially run on Diesel, and the current wisdom encourages
the public to buy diesel over petrol vehicles what kind of message is the Govmt/Govmts
giving? – One can only assume, like tobacco ( still promoted in prime positions,), is too
lucrative in Tax revenues for the Government/s to do the ethical thing?

Hans-Georg Trevers says:
6 March 2011

On the 22nd February I checked three Sainsbury’s stores for petrol prices. Our local one in Rugby was 128.9p per litre, the next was in Coventry at 125.9, and the third in Watford at 124.9. When I spoke to the people at the petrol stations they had been told by management not to give out the details of their prices. I had to wonder why! I had complained a couple of years ago about the same issue, and was told that the variation was due to customer demand. Surely all customers demand low prices. Do Sainsbury’s sell bread or milk or butter at different prices in store? It would be nice to know that supermarkets are treating all their customers equally.

If you want a supermarket to sell at the same prices in each branch you will probably have to set up your own. In the case of petrol, local competition and distribution costs affect prices. Expect to pay more in the highlands of Scotland than in busy urban filling stations.

V Falco says:
6 March 2011

A fair and logical point made Wavechange
Follow that logically, and on Stonoway – the community would be trading their homes for a gallon of fuel, farming with horses and cooking on wood.
And I guess, that is what ‘political manifestos’ are all about!
When the Utilities were nationalised and Govmt controlled it was for a reason, we were all part owners, stakeholders and the Civil servants, whilst probably not the the sharpest knives in the box, realised that they had to provide essential services to all, and the highly profitable concentrations of populations would fund the less accessible areas. Similarly the rural areas would provide the food stocks to feed the cities.

Now the wonderful Mrs Thatcher, decided that all Utilities should be privatised and be run more ‘efficiently’ – but for the shareholders benefit and not the cirizen /consumer/ once stakeholder.
So she sold our heritage, our natural resources for peanuts,but promised that her ‘Watchdogs’ would
still ensure fair play, fair prices for all and a high service level would be provided.

Well thank you very much Mrs T and all who have followed, you are unable to ensure fair play, you are unable to maintain a decent service level, a distribution system that suits all. Water Prices, Fuel, Gas. Electricity, Telephones, Rail – all of these are virtual monopolies who basically ‘tolerate’ the marginal demands of governments. Yet look at their profit levels,even during recessions- do we really think we are anything other than forced consumers?

It would be more effective if WHICH ? directed and harnessed our plight a little more effectively rather than set up a blog for blogs sake!

My solution is simple and repeated to all at any opportunity.
Let us choose A Bank, A Petrol distributor, a Water supplier, A telephone company and a Railway operator and either BOYCOTT it (where there is a choice) Or as in the case of Rail/ Water co DEMAND that the Government break the private monopoly/ies that is SW Water for example?
WHICH ? knows that this is dirty business, yet simply contains public indignation rather than orientating it.
try Googling 38 degrees for effective petitioning – we really must organise ourselves if we wantto change things for future generations

Steve W says:
7 March 2011

The price of road fuel is that which the market will bear. Until the British public get there act together and unite against this cosy relationship between HM Government and the Oil Companies the situation will only get worse. We have been conditioned to believe that any problem in the oil producing regions is an immediate excuse to raise the price at the pumps, whatever happened to the national reserve of petroleum products?
I am lucky that I do not need a vehicle to get to work and I have managed to cut my consumption, by restricting shopping trips and not going out, but if I don’t go out buying then the overall effect is to the detriment of the economy as the flow of money slows, which equals recession.
Basically the British motorist is being taken for a ride!

Alan says:
8 March 2011

We live roughly equidistant from the two market towns of Leek and Macclesfield. Macclesfield is the larger town with six petrol stations (2 x Shell, Total, Esso, Texaco, Tesco) whilst Leek only has three (Shell, Esso & Morrison’s). For the last 2-3 years Leek has generally been cheaper than Macclesfield, by some 2-3p, with Morrison’s leading the way. Not so long ago the difference was 5p though it’s down to 1p now.
Tesco drove down prices in Macclesfield when it first arrived in town some 10-12 years ago but these days is no cheaper and often a penny or two dearer than its rivals. Naturally we try to fill up in Leek.

Roger says:
22 March 2011

I remember a long time ago when ‘Maggie’ was in charge there was a petrol shortage! I’m sure other readers remember this? We had to suffer petrol rationing and petrol station closures; as we all did a few years ago. The other thing that took place was a huge price increase because of the shortage. I think prices almost doubled! Once the problems causing the shortage were sorted out, and other oil producing countries had stepped in to maintain the ‘world supply’ life went back to normal, except of course it didn’t!! Did the prices come back down again, of course not! Why not? Because the Government and the Oil Companys realised that it was ok to rip us off because we would always need to use our cars! That is why this country will never have a fully intergrated transport system where we can make our essential journeys using sensibly priced public transport!

Dave says:
25 March 2011

There’s a clear cartel operating between the oil companies – in each locality they fix their prices. Yet no agency such as the Competition Commission seems to have the guts to take them on so we, the motorists, are left to suffer. I hope it’s not because the government has such a vested interest in reaping the taxation revenue from higher prices.
There really should be a proper investigation into this, to include the reaction of garages to the Chancellor’s reduction in duty in the budget. Some stations reduced the price immediately, others haven’t; one local station to me did lower the price but only from having raised it on the morning of the budget – net result, same price as before! As for the retailers’ excuses about selling off fuel purchased at a higher price…how come they don’t keep selling at a lower price the fuel they’ve already got when the prices rise – instant rises are applied yet slow, or no, reductions.
How about a proper investigation by Which?

Peter Mantle says:
31 March 2011

I have a question regarding the difference between petrol amd diesel prices. When I first started driving diesel cars diesel was considerably cheaper than petrol and I was told that this was due to diesel needing less processing than petrol. I would like to know what has happened to these “processing costs” that now makes diesel 8 – 9p per litre more expensive than petrol. Is it just greed from the petrol companies now that diesel vehicles are more popular than they used to be.

I think this is because diesel contains particulates that cause more environmental damage than more refined petrol

Countries including the UK are becoming more aware of all pollutants – The EU is concentrating on reducing the CO2 and other pollutants.

Price is a good deterrent – by increase in tax..

Bob in Portsmouth says:
2 April 2011

I have just returned from the Canary Islands. Petrol is 1 euro per litre. If a small Spanish Island can import and sell at that price why can’t the UK?

Britain needs more income from Tax and fuel duty than Canary Islands – It is not only the import cost that governs the price at the pumps.

Britain has higher fuel duty than virtually all EU countries

.

Dave-Rugby says:
4 April 2011

My understanding of diesel prices during winter months is that heating oil is basicly similar & market forces determine the higher price, fuel companies always hike prices at the earliest oportunity as we are all aware. I allways buy fuel at the lowest price I see it & usually get it in Coventry or Leamington If passing through, otherwise Sainsburys is my cheapest locally,though not cheap Tesco is allways 1P dearer,& yes we are aware of a silent cartel.

Sally says:
5 April 2011

The garage where I live put their price down for one day after the budget to 129p. The next day it was put up to 133p. Then a notice was put outside to say for two days a week there would be a price cut (131p). Today I’ve gone out and they’ve put the price up to 135p. Do they think we are nuts and can’t work out that they’re fleecing us even more than before. This is an ESSO station so I won’t be visiting that again. Luckily I filled up when it was 131p. Who can I contact about this rip off?

James says:
4 May 2011

I can understand why chains have different prices, as the fuel may indeed be different, e.g. Shell Optimax versus BP Ultimate or whatever they call the things.

But why are the prices different across outlets from the same chain?

I’ve never actually looked but does a tin of Tesco Value Baked Beans cost one price in London and another Price in St Austell?

I really don’t see how two Shell stations less than 5 miles apart can charge different prices for their fuel.

IMHO chains should have to standardise their price across all their outlets (village, town, motorway, etc.) I have no problem with different chains charging different prices, but I shouldn’t have to drive around differnet Shell stations looking for the cheapest price.

Finally the government takes more than enough tax money of the motorists in this country they can afford to “equalise” the tax to keep fuel costs at a lower level. Have they not figured out that by not doing so they are actually hurting the ecomony as people stop spending in other areas in order to be able to afford the running costs, on what is commonly essential motoring, I know of very few people these days that just “go for a drive” because the weather is nice.

taffy says:
29 August 2011

Its funny i live in Bathgate (Scotland) where we have North sea oil yes oil so why do we import it if we can produce our own. The Tesco near me is £1.39 a litre same as BP one of the BP less than 200m is £1.40 per litre. The Morrisons in Livingston about 5 miles away is £1.35 and Murco about 3 miles away opposite direction is also £1.35. The nearest refinery is Grangemouth which is 10 miles away. Why do i think that the politicians are letting this happen with no intervention how come there is such a variation within a short distance. Food is so much more expensive not had a pay rise in years to compensate is this yet another rip off the hard work tax payer. Can anybody shed any light on this. Maybe the government should give out masks to tesco and BP just like Dick Turpin………….

john From kent says:
12 January 2012

Two Esso filling stations approx 200 mts apart are upto 4p.pl different in price. Why ?

Wayne Lawrence says:
5 March 2012

I live in Ely (Cambs) I find that local stations don’t tend to compete but FIX prices. Tescos for instance always keeps it’s price around 1pence per litre cheaper than the BP (franchise) who is always higher. That said in Kings Lynn where I went shopping the local Tesco there was 5 pence per litre cheaper than my local Tesco.

So Tescos are clearly price fixing locally, you can’t tell me any distribution cost change nor indeed any fuel difference between the two Tescos.

Pure profiteering going on!