Birmingham service station is first to cut the price of its petrol to 99.7p a litre

RAC fuel spokesman Simon Williams said: “We have been expecting to see the price of petrol come down to £1 per litre, or lower, for some time thanks to the decline in global oil price and retailers willing to make cuts at the pump on an almost weekly basis.

“While the average is around the 109p mark, we have seen a number of retailers going as low as 104p in recent days, but 99p per litre is the lowest we’re aware of and it is hard to see how they can be making a profit as the cost of wholesale fuel needs to come down at the same time.

“However this is of course more good news for motorists in that area who will benefit from the kind of prices not seen for more than five years. It is usually the supermarkets that lead the way on price cuts this deep, so perhaps this will encourage them to make a similar move, but our feeling is it may be a while yet before others follow suit and go below a £1 per litre, although it may well happen over the next few weeks.”

Harvest Energy has cut its petrol price to 99.7p for litre at three forecourts in Walsall, Redditch and Birmingham. The move appears to have prompted another round of price cutting with Asda knocking a further 2p off the price of its petrol and diesel. The latest reduction means that Asda customers will pay no more than 103.7p a litre on petrol, with diesel at 110.7p a litre from tomorrow.

Williams said: ”We are seeing bold action by fuel price champions to driving down the retail price of petrol and diesel which is prompting other retailers and supermarkets to cut their prices and share the savings with motorists. While some retailers are slower to cut prices all motorists whether urban, city or rural will benefit from the ripple effect as prices reductions are inevitable in the face of such strong price competition.

“However we are now getting to a point where the share that the Treasury takes from the forecourt price is nearing 75% which is a bitter pill for motorists and retailers.

“We would welcome some bold thinking by this Government and the other political parties as the election looms as to how they can capitalise on the stimulus that lower fuel and oil prices can have on the UK economy while improving fairness and transparency for private and business road users. We should perhaps be seeking a commitment from all the major political parties that they will not look to increase fuel duty in the next parliament.”