Page last updated at 16:03 GMT, Tuesday, 5 August 2008 17:03 UK

Petrol prices 'transparency' call

Oil rigs
Oil prices hit a three-month low on Tuesday

Petrol prices are falling but not fast enough in response to dropping oil prices, according to the AA.

Oil prices fell to a three-month low on Tuesday, with US crude down to $118 a barrel at one point.

The AA said prices at the pumps had come down in recent weeks and petrol was at an average of 115p a litre but could be cut further.

Retailers said that the volatility in the market meant that oil price changes were not immediately reflected.

Latest prices

Analysts said that rising supply and slowing demand were reducing the price of oil, having peaked at $147 a barrel on 11 July.

Any pump price above 1 per litre causes hardship and misery for many millions of car dependent motorists
Edmund King, AA president

The AA says that a $2 fall in the price of a barrel should be reflected in a 1p fall at the pumps. This would be the equivalent of prices dropping by 14p from the peak to the latest low.

But the motoring organisation said that a lack of transparency in pricing meant that it was very difficult to tell whether motorists were getting a fair deal.

An AA spokesman said retailers were cutting prices "selectively and not quickly enough".

On Monday, the average price of petrol was 115p a litre, and diesel cost 128p a litre, according to figures from the AA and Experian Catalist.

"Any pump price above 1 per litre causes hardship and misery for many millions of car dependent motorists," said AA president Edmund King.

"Already 55% of AA members have cut back on journeys due to prices at the pumps and others are sticking to speed limits and eco driving to make their expensive fuel go further."

Volatile market

Experian Catalist said that the price of petrol on Monday had dropped by 2p and diesel by nearly 3p a litre compared with a week earlier. Petrol was down by 4.5p compared with a peak on 17 July and diesel by nearly 5p over the same period.

Graph showing petrol prices at pump

A tussle over prices by the supermarkets was in evidence during the latest cuts in price.

"We continue to review prices daily and we reduced petrol by up to 3p and diesel by up to 4p at the end of last week to ensure we provide customers with the best possible value for their fuel on a local basis," said a spokesman for Sainsbury.

An Asda spokesman said its stores across the country had also cut prices in the last two weeks and had a "watching brief" regarding the latest oil price dips.

Representatives of rival Tesco also said prices had fallen but a spokesman stressed that oil prices needed to show a sustained fall in what was a volatile market.

An AA spokesman accepted that there were a number of factors that affected the cost of petrol and that a cushion was needed against the volatility of the cost of oil.


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