Woolworths has just announced a scheme where you can get up to 14 cents off the per-litre price for petrol at its outlets. That might sound tempting — but it pays to do the calculations carefully, because the chances are the savings will be illusory.
Like arch-rival Coles, Woolworths already runs a scheme where you can get 4 cents a litre off petrol in its outlets if you have spent more than $30 at one of its supermarkets. It is now offering an additional deal: spend $10 in the store at the fuel outlet and you'll get an additional 10 cents off each litre. Combine those and you're potentially saving 14 cents a litre. The offer runs until February 4.
Falling oil prices have meant that there's a widespread expectation that petrol prices will fall this year, and we have seen cheap prices already in some locations. From that viewpoint, the Woolworths move seems cynical: you can have cheaper petrol, but only by handing over more money. You're not seeing the benefit of a price reduction automatically; you have to pay for it.
And when you do the analysis, you realise the savings are quite likely to be illusory. Let's presume that you fill up with 50 litres (which is close to a full tank). That will save you $5 — but you'll have to spend $10 to do so. Your total spend is higher than if you hadn't aimed for the discount.
Not only that, you'll have to spend $10 at service station prices, which are considerably inflated relative to supermarkets themselves. The chances are very good that if you purchased that bread and milk, or that bottle of Coke and packet of chips, at the supermarket, you would save as much or more than the "discount" offer gets you. (Note also that cigarettes and tobacco are not eligible.) You might have better odds purchasing a magazine or newspaper, which have standardised prices — but even there, subscribing will be cheaper if you're serious about saving money.
Spending $30 in a supermarket isn't difficult, so that 4 cent saving is welcome. I'm a lot less persuaded that spending an extra $10 to save $5 makes good financial sense. Buying when petrol is cheapest from whoever has it cheapest will save you more in the long run.
Woolworths has 24 per cent of the local fuel market (equal with Coles), so it's to be expected that some consumers will be tempted by this offer. But if you're committed to saving money, do the maths carefully. Don't let the headline "14 cent" claim fool you.
Lifehacker's Loaded column looks at better ways to manage (and stop worrying about) your money.