The war on the forecourts intensfied yesterday as two of the UK's largest supermarkets cut petrol prices and further reductions looked likely as crude oil fell below $60 a barrel to its lowest level since March.
Tesco and Asda unveiled plans to slash petrol prices due to the lower wholesale oil price. It is the fifth time Asda has cut its petrol prices in the past five weeks, while Tesco has also reduced its charges numerous times over recent months. The Wal-Mart-owned Asda chain will implement the price reductions across the country but Tesco is not prepared to introduce a nationwide flat rate.
Luke Bosdet, a spokesman for The AA Motoring Trust, said: "This is excellent news for motorists. There has been a major drop in the price of crude oil but it usually takes between four to six weeks for that to be reflected at the pumps. There may well be more price cuts to come as it would appear that some of the supermarkets have gambled on the lower wholesale price to steal a march in the price war."
Asda has sliced 1p off the price of unleaded to 84.9p a litre nationwide and 2p from the price of diesel to 89.9p. The supermarket said unleaded petrol is the cheapest it has been since June 2005.
For its part, Tesco has pledged to cut up to 2p off its unleaded prices and up to 1p off its diesel prices but declined to give an average price due to regional fluctuations. A third supermarket chain, J Sainsbury, cut its unleaded price by 1p to a flat rate of 85.9p at the weekend, its ninth price cut in five weeks.
The UK has the fourth highest unleaded petrol prices in Europe but it is diesel prices that sting consumers the most due to a wider price gap between the retail and wholesale prices. Mr Bosdet said supermarkets are more than likely to offer the cheapest petrol to consumers but this is not always the case for diesel.
Despite the lower prices, motorists are unlikely to feel much benefit as fuel consumption rises in the winter because of the greater need to use windscreen wipers, headlights and heaters.
Over the past month, average unleaded fuel prices fell 7.9p to 90.3p per litre, the largest fall the AA has recorded in 18 years. The average price of petrol in supermarkets was 87.9p.
This has been driven by lower crude oil prices, which have fallen from more than $78 a barrel in August as inventories increased and the conflict in Lebanon eased.
The crude oil price fell to a six-month low, below the $60 a barrel benchmark, yesterday after the oil giant BP said production at Prudhoe Bay, the largest US oilfield, would be back at 80 per cent by the end of the week, compared with its previous target of the end of October.
The Iranian government also said it would be open to talks with international watchdogs over its nuclear programme, calming fears of a potential squeeze on supplies.Reuse content