Supermarkets in petrol price war as oil prices drop

Motorists hit by high oil prices have finally been given some good news as a petrol price war breaks out between three of the "big four" supermarkets.

The cuts to petrol pump prices saw one supermarket chain slash the cost of its unleaded and diesel by as much as 5p a litre. Asda, the UK's second largest supermarket group, which has 170 petrol stations, started the wave of price cuts when it announced a 3p per litre reduction in the price of unleaded and diesel on its forecourts. Prices at its pumps fell to 113.9p a litre for unleaded yesterday, with diesel down to 128.9p a litre.

David Miles, Asda's trading director, said: "We are seeing a more stable reduction in oil prices, allowing us to pass on the savings to customers."

Morrisons, which has 285 forecourts across the UK, responded by offering customers a 4p price drop at its unleaded and diesel pumps. Group store operations director Mark Gunter said they wanted to pass on savings quickly.

Both companies said they were making the cuts in an attempt to pass on savings from the falling price of oil to its customers. The price of a barrel hit a record high of $147 (£74) earlier this month, but has since fallen to around $130.

The price war escalated further when Sainsbury's said it would be running a promotion that will see customers spending at least £50 at the store given a 5p per litre discount on its petrol. Starting tomorrow, the offer will last for two weeks.

The AA welcomed the cuts and said passing on the falling cost of oil to drivers was long overdue. "We have seen two drops in European wholesale fuel prices so far this summer with the UK motorist seeing next to no benefit," said AA president, Edmund King.

"Since mid-July the wholesale gasoline price has fallen six per cent and we expect fuel suppliers to pass on, not pocket, the saving for the good of UK families, hauliers and the economy."

The UK's biggest supermarket chain, Tesco, said it had no plans to introduce an immediate cut to the price of its petrol. It already runs a scheme that allows customers spending £50 on provisions in its stores to save five pence a litre at its pumps.