Family-run petrol station selling £1.68 fuel: 'We want to pass on price drop'

A family-run petrol station has been overwhelmed with customers after it slashed prices to almost 20p cheaper than the UK average - with the owner saying he is confused as to why rivals haven't done the same.

Drivers from "all over" have been flocking to Bailey's Garage in Abergavenny, South Wales, since it started selling petrol for just 169p per litre.

On Friday morning, the garage posted a "price drop alert" on its Facebook page and said petrol was now at 167.9p.

It means it's now a 20p cheaper for unleaded at Bailey's Garage than the national average, leaving owner Ian Bailey scratching his head as to why no one else has dropped their prices as much.

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Bailey explained how he buys fuel everyday on a system which sets the cost of petrol and diesel based on the fluctuating prices of crude oil.

As an independent business, he can then decide how much of a mark-up he puts on the price at the pump.

He said: "I'm wondering as well why other people haven't dropped their prices," he said. "I can't see why we're so cheap. We've always been cheap. I could put it up to be the same as other garages and we would be laughing. But times are hard and we like to pass on the drop to the customer."

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The average price of petrol in the UK as of Monday was 187.5p per litre.

According to price comparison site Confused.com, Bailey's Garage has the cheapest petrol in the local area, with the nearest supermarket, Asda, selling it for 182.7p per litre as of last week.

The RAC said last week it believed petrol stations were overcharging for the price of petrol.

They said it should be around 174p per litre but big chains had been dragging their feet over implementing a recent decline in prices.

The RAC also found of the few petrol stations that were selling at that price, most were independent.

Bailey said his garage is the busiest it's been in 50 years.

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He said supermarkets buy their fuel at least three weeks ahead so the fuel they're currently selling is based on the price they bought it at three weeks ago.

The lag time between buying and selling fuel for garages works in reverse too - Ian said there have been times when his prices have been higher than the supermarkets.

Three weeks ago, the price went up overnight by 10p and because he does not use the three-week lag system he had to explain to customers why then he was more expensive than the local supermarkets.

This also means petrol prices at average fuel stations could rise in the coming days.

He said he doesn't believe petrol stations are profiteering and prices are usually within 5p of each other with margins very low.