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Last Updated: Thursday, 10 June, 2004, 18:21 GMT 19:21 UK
Asda move sparks petrol price war
Cars leaving an Asda superstore
Asda says it is offering motorists "a fairer deal"
Asda has triggered a petrol price war after moving to cool prices by cutting unleaded and diesel to 79.9p a litre.

BP swiftly followed suit announcing it would slash prices by an average of 2p a litre - cutting the cost of unleaded to 81p and diesel to 82p a litre.

Meanwhile, Tesco vowed not to be beaten "in any location" on fuel prices and Sainsbury announced it would be "undercutting Asda" from Friday.

Surging oil prices have pushed UK prices above 83p a litre in many areas.

The increase in petrol prices had led to talk of fuel protests similar to those seen in 2000.

Asda says it is responding to a drop in prices after recent Opec talks, and has urged competitors to cut prices as well.

An AA Petrolbusters spokesman said it was inevitable a supermarket would lead the way to cheaper fuel.

"They've consistently been cheaper than High Street chains," he said.

"The fuel crisis here has now diminished slightly, but instability could make prices go back up again easily.

"We would also expect the averages to fall more significantly [on Friday] but it may still be by less than a penny," he added.

Prices in line

Of its price drop, Asda said in a statement: "In line with its commitment to offer motorists the best prices, Asda intends to pass these savings on to customers without any delay - a decision that flies in the face of recent oil company price rises."

It said bringing unleaded and diesel prices "into line" would offer all motorists a fairer deal and the chance to benefit from recent falls in crude prices.

The company said it was offering the lowest pump prices locally across the UK.

But Tesco later entered the fray saying it would uphold its location price promise to be "as cheap as everyone else" in any area.

"We won't be beaten, in any location, on the price of petrol," the group said.

"In addition we are also running a petrol promotion where customers can get 5p off per litre when they spend 50 on shopping at our stores."

Asda forecourt
Cars queue at an Asda petrol station during the fuel protests of 2000
Sainsbury's also weighed into the battle, vowing to undercut Asda on unleaded and diesel from Friday.

However, the group said it believed it had the lowest fuel prices in the country - the price of unleaded at one of its outlets in Thanet, Kent, was 76.9p a litre.

Latest figures from AA Petrolbusters show the average price for a litre of unleaded petrol across the UK is 82.77p, although supermarkets are around 1p a litre cheaper, and 83.72p for diesel.

In a handful of towns the average price is about 84p a litre.

It was an average UK petrol price of 85.32p, in June 2000, which sparked widespread fuel protests.

Recently, haulage firms have been warning the government to prepare for a series of protests if the cost of petrol and diesel does not come down.

Increased production

Others have been calling for a proposed rise in duty on petrol, set for September, to be postponed.

Opposition parties want the 1.9p-a-litre planned duty rise to be scrapped.

Chancellor Gordon Brown has said the focus should be on persuading oil exporters' cartel Opec to get world prices under control. He will review progress in August.

At the Opec meeting in Beirut last week it was agreed to increase production by 2 million barrels a day, in an effort to cool oil prices.

Last month, US oil prices rose to a record $42.45 a barrel.

The BBC's Quentin Sommerville
"At last, a sign of better times for the motorist"

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