Supermarkets Announce New Petrol Price Cuts

David Crabtree, Midlands Correspondent

The cost of fuel is being slashed at pumps across the UK in the latest phase of a supermarket petrol price war.

It was sparked by Asda, which is cutting prices to its lowest this year. Sainsbury's,Tesco and Morrisons have acted quickly to announce reductions.

Asda has launched a national cap on prices, saying drivers filling up at its forecourts will pay no more than 126.7p a litre for petrol or 133.7p for diesel.

Sainsbury's says it is cutting prices by up to 3p - their cheapest for two-and-a-half years.

Tesco will reduce prices by up to 2p. Morrisons will do the same "at the majority of its sites".

Quentin Wilson, from the campaign group FairFuel UK, said: "Don't get excited, everybody, because this will not stay. We will see it go up again.

"But at least now we have a much faster reflection of wholesale prices at the pump. We don't have to wait two or three or four weeks for the fuel to come down in price when we know it goes up in a heartbeat, so I'm pleased, FairFuel is pleased."

The AA has welcomed the move, saying it reflects a fall in the wholesale price of fuel, but the continued uncertainty over Libyan oil production continues to leave the market unpredictable.

An AA spokesman said: "The average price of petrol in the UK has hovered around the 132p a litre mark since mid-October, making 126.7p a very good price."

At Asda in Leamington Spa, motorists greeted the news with delight.

Susan Cooper, who drives 50 miles a day, said: "This will save me a lot of money. It is about time we had some better news with gas and electricity going up."

Another customer, Martin Cavanagh, said: "It has to be good news. I know oil and everything is a complicated commodity and that's why we get the price jumping around. Let's hope it goes low and stays low."

Oil analyst Richard Mallison said it was significant that retailers were passing on the fall in wholesale oil prices to consumers on the forecourt.

He told Sky News: "The biggest reason for supermarkets being able to slash prices at the pump has been the change in the dollar-to-pound exchange rate.

"The dollar's weakened, that's brought down the cost of oil and wholesale fuel and that's now being passed on."

But he warned that low prices may not last for long.

He said: "We've seen the UK recovery stronger than expected, we've seen the troubles with the US shutdown and debt ceiling - both of those effects might fade in terms of the exchange rate, which would then mean petrol prices starting to go up again."

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