Morrisons to offer huge cuts on petrol

Feb 23, 2012   //   by Keith McDonald   //   Money Saving Tips  //  6 Comments

Supermarket chains are waging price wars by offering eye-catching discounts on petrol for customers who spend in their stores.

Following Asda’s petrol price cuts in November and Tesco’s fuel offer last month, supermarket chain Morrisons has raised the bar by offering a record 15p per litre discount off petrol for customers spending £60 in store.

Supermarkets clashed over the issue last year. In April 2011, Morrisons’ Fuel Britannia scheme offered 6p off a litre of petrol for customers spending over £40 in store. This was branded no more than a ‘gimmick’ by a disgruntled Asda, upset that its below-average fuel price longevity was being supplanted by a rival’s deal that required high levels of in-store spending.

But campaigners have little care about favouritism, it would appear. Having voiced their concerns at the soaring cost of fuel, they are preparing to take a stand early next month to demand lower fuel duty ahead of the budget. Oil prices forced the price of diesel to a record high last week, while unleaded petrol currently sits within reach of the record high reached in 2011.

Such is the concern about the rising cost of fuel, rival supermarkets are expected to offer competing deals to ensure that their market share of groceries and fuel is not lost.

The re-launched Fuel Britannia will offer fuel-discount vouchers to Morrisons customers spending £60 or more in-store between February 23rd and March 4th, and there will be a further week to redeem them at Morrisons petrol stations.

We know how tough it is for our customers.  This deal will help them in these tough economic times. Nobody has ever knocked this much off a litre of fuel before. This will make a real difference for our customers.

Richard Lancaster, Marketing Director, Morrisons

If a typical family car holds 75 litres of fuel (which would currently cost some £107 to fill), the savings could total £11.25 per tank through Morrisons’ scheme. On a £60 grocery shop, this is effectively a cashback offering of up to 19% from the Northern based supermarket. On a weekly tank fill, this is the equivalent of saving £585 per year.

More reasons to shop at Morrisons? If rivals do not respond with a credible counter-offer, it seems highly likely that Morrisons will sweep the decks for a fortnight.

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  • fredd

    Will this really effect anyone come on 15p per litre? the government should cut damn taxes then we could see a decent drop if fuel prices.

  • Keith

    Well, it’s a fair point. I would imagine that, at the point when it costs £100 to fill a tank, a 15p per litre discount offer will be enough to capture attention and divert people to Morrisons where there is a choice available. Lasting a fortnight, I understand how it attracts the label of ‘gimmick’. It’s a publicity stunt and a profit wager, not a giveaway.

    The issue of tax cuts is going to always going to be a difficult discussion. How does a fuel tax cut get funded? The Lib Dems want to raise the personal allowance on income tax. VAT has already been pushed up. Debates about borrowing and taxes on bonuses are murky waters too. The government knows that there’s only so much it can do before companies and individuals seek to circumvent and become non-domicile (and it is worth noting that a bill has been drafted for a reformation of non-domicile tax regulations for implementation in April).

    It’s large oil companies that are the problem. They are raking in billions in profit, and it’s about time they gave a little back. We could say the same about supermarkets, but it’s in their own interests to compete, and this is an example. Thanks for reading!

  • cameron

    I bet they make more money through this stunt than they loose from cutting 15p off fuel, same for everything shops riddled with HALF PRICE tags when there was never any intention to sell it at any other price than half. I bet i could save at least £30 by shopping somewhere else in the first place so this 15p is laughable.

  • Keith

    You’re probably not wrong. That’s the skill of judging the price elasticity of demand. Supermarkets have often floated close to the edge of competition laws by selling essential staple goods at below cost price to attract custom while profits are recouped elsewhere. But by the sheer nature of the industry, I don’t think supermarkets are necessarily the worst examples of anti-competitiveness (once the disincentives for collusion are strong enough). Have a look at the This Is Money piece on Brighthouse. That’s quite an eye-opener.

  • jacob

    i think morrisons has got a great offer on there, its such a shame i don’t have a car and i never seem to be able to spend over £60 there

  • Keith

    That’s probably a useful point as well. This is an offer that best suits families with larger shopping budgets. It could be argued that families require more help during times when finances are stretched, but it still costs more per person to live alone, and £60 is not the easiest prospect unless you have a chest freezer or plan to restock your spirits cabinet.

    Still, it looks unlikely that fuel duty will be cut in next month’s budget, so it’s down to consumers to find ways to make their own savings. For all the market failure that supermarkets can cause, it will do their cause no harm to keep this competitive streak at the petrol pumps.