The areas suffering massive petrol price penalties
In theory we should be seeing a huge drop in petrol prices around the country - reflecting the 16% fall in the oil price this month. However, a new report has revealed that in many parts of the country this is far from the case - and in some, drivers are paying a 4p-5p petrol price penalty for their location.
The report from the AA found that petrol price drops were disappointing across the country - averaging around 2p in the last month or 1.5% - which is only partly explained by the fall in sterling against the dollar. There is hope that over time more of these cuts will feed into petrol prices.
However, the price cuts also depended to a large extent on where people live. The drop in prices by region varies from 1.6p in the North to 2.4p in East Anglia. The AA indicated that this is likely to be because of variations in competition. Petrol distributors have been lowering prices to compete with the supermarkets. However, in rural areas or small towns without a supermarket petrol station, they have left prices frustratingly high.
This is clear from the fact that a 0.75p cut came in the days after 29 September when Sainsbury's announced that it would follow Asda in cutting prices, and would charge less than 125p a litre for petrol. Much of the rest of the fall came as Asda dropped the price of petrol by another penny in order to remain the cheapest.
The cuts at Sainsbury's have changed the map of petrol prices. Previously those areas with an Asda petrol station were significantly cheaper. Now those areas with a Sainsbury's petrol station have dropped too.
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Paying the penalty
AA's president, Edmund King said in a statement: "This big drop in the cost of petrol feels like it should be cause for celebration – the budgets of hard-pressed workers whose wages have failed to keep pace with inflation will ease to some extent. However, pump prices in the country and small rural towns remain stubbornly high." The AA put the average penalty people pay for living in these areas at around 5p.
The AA identified smaller rural towns such as Midhurst, Market Drayton, Ludlow, and Tavistock as suffering particularly from inequitable pricing, adding that drivers from these communities are more car dependent and many are on lower incomes too.
King said: "These are the places that, only 18 months ago with petrol at 140p a litre, many lower-income workers faced the choice of cutting back on food and essentials or being able to afford to drive to work. That is why missing out on the benefit of falling pump prices makes them so angry."
Petrol price drops in the past month
East Anglia 2.4p
South East 2.3p
South West 2.2p
Northern Ireland 2p
North West 1.9p
West Midlands 1.9p
East Midlands 1.9p
Yorkshire and Humberside 1.6p
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