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BP cuts 3p off litre of petrol

BRITISH PETROLEUM is cutting the price of petrol by 3p a litre (13.6p a gallon) from midnight tonight. But thanks to local price wars, mainly with supermarkets, only half its petrol stations will be affected. The rest are already selling at or below the new price.

The cut is to the maximum recommended price, which will drop from 54.9p to 51.9p for four star, the level last charged in September. BP says that the cut is because wholesale fuel prices have fallen and the pound has moved up against the dollar.

Jet said that it was reducing prices by 12p a gallon, taking the cost of its unleaded petrol to 199.6p (43.9p a litre). Texaco, Esso and Shell said that they were monitoring the situation.

However, there is no guarantee that all BP stations will cut prices. The spread of cut-price petrol at supermarkets has upset the old market structure.

The stations where prices are already low are in areas where competition is fiercest, and particularly where there is a Tesco or Sainsbury with its own forecourt. The AA says in its report for November that the average price of a litre of supermarket petrol was 49.23p, compared with a national average of 52.26p.

But averages can be misleading. Shell, which announced yesterday that 'a maximum recommended price cannot be taken at its face value', said that there was a gap of 7p a litre (32p a gallon) between its most and least expensive stations, and that it would therefore be sending people out to check what was happening at individual BP stations before reacting.

This gap has widened since the Gulf crisis, when supermarkets aggressively used pricing to increase their share of the petrol market from 6 to 12 per cent. The oil companies, keen to hang onto profits, have kept prices up where they can, and only reduced them where they have to.

According to the Petroleum Times Energy Report, the cheapest fuel is to be found in Cardiff, where at the end of November it averaged 47.3p, followed by Bradford, Ipswich, Stoke on Trent and Liverpool. Drivers paid the most for their four star in Belfast (54.17p), Edinburgh, Dover, Plymouth and Glasgow.