Fuel below £1 for the first time in a year

START of a fall? Supermarkets start dropping their prices

SAINSBURY’S has become the latest Oldham retailer to reduce the price of a litre of petrol to less than £1.

It made the move this morning, following Morrisons and Asda, which imposed the cut yesterday afternoon.

All are now charging 99.9p, the cheapest price for a year, and around 18p a litre cheaper than in July when the price of a barrel of oil reached a record $147.

And there was more cheer for travellers when British Airways and Virgin Atlantic announced a reduction in fuel surcharges.

Asda has also reduced the cost of diesel from £116.9p a litre to 110.9p. A litre of diesel at Morrisons was cut to 111.9p, as was a litre of BP diesel.

However, the falling price of fuel is in many ways a consequence of the global recession. As industries — including those in China — slow down, there is less demand.

The price of oil on world markets yesterday fell to a 14–month low of around $75. OPEC is considering a cut in production to try to maintain prices.

Damien Cox, senior analyst at energy adviser John Hall Associates, predicted further falls as the outlook for the worsening economies becomes clearer over the coming months.

He said: “With the economic situation looking the way it is, I don’t think we have seen the bottom yet. There’s still a little bit to come out of this over the next few months.”

Asda trading director Darren Blackhurst: “We are committed to delivering the best value to customers across the board and we review our prices daily to achieve this.

“Drivers should not be paying more than 99.9p a litre for unleaded fuel based on current oil prices.”

Morrisons chief executive Marc Bolland said: “This is strong support for the millions of motorists who are served at our forecourts. We are absolutely committed to delivering value for all our customers, whether they are shopping in our stores or filling up at our forecourts.”

RAC motoring strategist Adrian Tink said: “Finally we have a bit of respite for Britain’s hard-pressed motorists.”

AA president Edmund King said the supermarket announcements represent a full–blooded phase in the petrol price war.

He went on: “These savings give driver and family budgets a very welcome boost when other bills are exerting severe pressure.

“However, the Government should not take these price reductions as an excuse to increase fuel duty.

“We suspect that these prices are right on the edge if not below the point that petrol remains profitable.

“They will be hard for other retailers to match, although falling fuel wholesale prices from reduced demand and cheaper oil will catch up.”