Petrol prices: Pump wars flare up after Asda cuts fuel by 2p

Supermarkets today kicked off a new round of forecourt fuel price cuts by lowering the cost of a litre of petrol closer to the £1 mark.

Asda said it would knock 2p off petrol and diesel — its 15th cut since September — from tomorrow. The move is likely to be followed by other supermarket groups.

The cut means that Asda customers will pay no more than 103.7p a litre on petrol, with diesel at 110.7p a litre.

A garage in Birmingham was today said to be selling petrol at 99.7p a litre but experts said it would be a while before the cost in London falls so low.

AA president Edmund King said: “There remains a postcode lottery out there when it comes to fuel prices. It will still take some time to get down to an average of £1 per litre, particularly as 70 per cent of the pump price is tax (57.95p duty and 18.3p VAT).”

Calculations by the RAC Foundation suggest that British motorists are in line for a £4 billion windfall from cheaper petrol and diesel prices. Drivers could be at least £140 better off this year than they would have been if prices had stayed at the same levels as last summer when the average cost of a litre of petrol was £1.33.

Asda’s move came as the oil price continued its remarkable slide. The price of a barrel of Brent crude today dropped by 2.6 per cent to $48.74, its lowest level since April 2009.

Wall Street investment bank Goldman Sachs said the price would stay close to $40 for most of the first half of this year. It has now fallen by more than half since June, when a barrel was $110.

Pressure is growing on energy suppliers and airlines to cut their prices.

Ed Miliband has said that energy regulator Ofgem should be given new powers to force firms to cut gas and electricity bills following steep falls in wholesale energy prices.

Mark Todd, director of market price comparison site, energyhelpline.com, said: “Our wholesale cost analysis shows energy suppliers could now drop their rates by £136 for a standard home or 10.3 per cent if they passed on the wholesale price falls. Wholesale gas is now down 28 per cent on the time of the last price rises and electricity is down 15 per cent.”