Supermarkets drop petrol prices

Sainsbury's was the first supermarket to cut petrol prices

The supermarket petrol price war has intensified with Sainsbury's cutting prices for the second time in a week.

The chain cut its unleaded petrol from 95.5p per litre to an average of 92.9p, while the average cost of its diesel is now 94.9p per litre, down from 97.5p.

Until last week, Sainsbury's had sold its diesel for an average of 98.8p per litre and unleaded for 97p.

Tesco has cut its fuel by 2p and Asda, by 4p. It comes after the cost of crude oil fell to 70$ a barrel on Thursday.

It seems to be hovering around the 70 US dollar mark, it would just take another hurricane and petrol prices would shoot up again. Paul Watters AA Motoring Trust

AA Motoring Trust spokesman Paul Watters said: "It is such a volatile market you cannot sit back and say things are getting better.

"We are not out of the woods yet. The trend is historically upwards.

"Maybe in the past it has gone higher than it should have but I do not think it will ever go back to 50 US dollars a barrel.

"It seems to be hovering around the 70 US dollar mark.

"It would just take another hurricane and petrol prices would shoot up again.

"I would hope it isn't a temporary dip but it's certainly a move in the right direction."

'Competitive market'

The average cost of Asda's unleaded petrol is down to 93.9p per litre, while its diesel now stands 95.9p per litre from 97.9p per litre.

Mr Watters added that the supermarkets were able to "dictate" the price of fuel because they supplied the vast majority of petrol to motorists.

"It's a very competitive market," he explained.

"For supermarkets fuel can be a loss leader and so it's part of their marketing strategy that they do this. But it is putting smaller retailers out of business."

Tesco petrol prices are thought to vary in different parts of the country because it has a local pricing policy.