Cost of diesel dips below petrol

The cost of diesel has dropped below the price of petrol at some supermarkets for the first time in more than ten years.

Morrisons was the first of the big supermarkets to cut the price of diesel, lowering it by up to 2p per litre. Then Tesco, Asda and Sainsbury's followed the move with price cuts of their own, reports the BBC.

According to analysts, this is the first time that diesel was cheaper than petrol since July 2001. At that time, the average cost of diesel was 77.92p per litre, compared to petrol at 77.94p per litre. A month earlier, in some areas diesel had been a whole penny cheaper and a year earlier, diesel was nearly 2p cheaper than petrol.

Petrol director for Morrisons, Mark Todd, explained that lower wholesale prices had meant the supermarket was able to pass on savings to its customers.

"This is a milestone in motoring and many younger drivers won't remember the last time that diesel prices were lower than unleaded," he said.

Reasons for the price flip

Mr Todd pointed out that pump prices are influenced by a variety of factors – such as the distance from oil terminals and refineries, so the lower prices may not be available everywhere.

The RAC said that an increased supply of diesel from refineries outside the UK was the most likely explanation for the recent price flip.

Fuel spokesman for the RAC, Simon Williams, explained: "With the price of crude oil standing at $56.50 (£36.27) and the pound relatively strong against the US dollar – the fuel trading currency – there is scope for further price cuts of up to 4p per litre off diesel in the next fortnight, and unleaded may even benefit from a slight reduction too due to the continued oversupply of oil."

Mr Williams also noted that drivers of unleaded petrol vehicles should not feel "short changed".

He said: "What we are seeing is the diesel pump price coming down to a level closer to what it should be due to the effects of greater refining capacity in the Middle East." In fact, he pointed out that wholesale prices for diesel have actually been cheaper than petrol since the end of May.

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