Asda and Tesco slash fuel prices again in supermarket forecourt battle

ASDA declared a supermarket petrol war last night by slashing prices at the pumps for the second time in a week.

It cut petrol by 2p a litre and diesel by 4p, prompting rivals Tesco and Morrisons to follow suit with price drops of their own.

Asda also challenged rival retailers to stop pricing petrol locally and to adopt a national system.

Its action follows a cut of 3p on diesel and unleaded announced last week – which provoked similar drops from Morrisons, Sainsbury's and Tesco.

Last night Tesco and Morrison's cut prices again.

In contrast, major oil companies were accused of 'profiteering' by failing to pass on to motorists a 12 per cent drop in the wholesale price of fuel.

The AA said oil giants were 'dragging their feet' despite making billions of pounds in profits.

The fall in wholesale fuel prices meant there was scope for oil giants to cut 6p from a litre of unleaded and 7.5p from diesel – but they are failing to do so, the AA said.

Last week Morrisons took 4p a litre off both unleaded and diesel, and Sainsbury's is currently running a 5p-off-per litre promotion when customers spend £50 or more in-store.

The AA said average UK petrol and diesel prices had fallen just 3p since the peak in July.

AA president, Edmund King, said: 'The price reductions led by Asda will bring a sigh of relief to motorists. We hope that more retailers will join in soon.'

But he added: 'Asda's latest drop in petrol prices effectively passes on the recent fall in wholesale prices, underlining just how far other major fuel retailers are dragging their feet on price reductions.

'Towns with Asda filling stations will see prices at neighbouring fuel stations drop to compete. Those without will be hostage to whenever fuel sellers finally decide to pass on wholesale reductions.'

RAC motoring strategist Adrian Tink said some motorists could now save up to £5 per fill-up.

'But let's not kid ourselves,' he added. 'Prices are still too high and motorists are still feeling the pain at the pumps.'

Asda's action follows a cut of 3p on diesel and unleaded announced last week - which provoked similar drops from Morrisons, Sainsbury's and Tesco.

Tonight Tesco retaliated again with cuts of up to 2p per litre on petrol and 4p on diesel at the store's 430 petrol stations - pledging to match its rivals in local areas.

Morrisons also cut the price of unleaded petrol by 2p a litre and diesel by 4p a litre at all of its 285 forecourts across the UK 'with immediate effect.' Last Monday Morrisons slashed 4p a litre off both unleaded and diesel.

Sainsbury's said: 'We continue to monitor prices and will always be competitive on a local basis.'

It is currently running a 5p off per litre promotion when customers spend £50 or more in-store and they will earn Nectar points as well.

Yesterday BP unveiled half year profits of £6.5billion and Shell also set to unveil another bumper half year.

BP said it had cut its prices by up to 3p adding: 'We will continue to make further price reductions for the rest of the week.'

It was also recommending that BP garages run by independent dealers - three-quarters of the petrol stations with a BP badge - drop their prices.

Price cuts by supermarkets traditionally force fuel giants like Shell, BP, Esso and Texaco to cut their own prices at nearby filling stations.

But forecourts further afield rarely feel the need and are holding motorists 'hostage', says the AA.

Asda challenged rival retailers to stop pricing petrol locally and to adopt a national system.

The AA said that since the average UK price of fuel peaked on July 17 at 119.70p per litre for petrol and 133.25 for diesel, petrol prices had fallen yesterday to 116.84p and diesel down to 130.65p, reductions of less than three pence.

Asda's across-the-board price drop to 111.9p per litre for petrol, represents a 5.27p reduction on the average Asda price recorded by the AA on July 15. Diesel is down 5.57p on the AA's mid-month figure.

AA president Edmund King said: 'The fuel price war started with the supermarkets last week and now we appear to be entering Round Two of the battle.

'The price reductions led by Asda will bring a sigh of relief to motorists. We hope that more retailers will join in soon.'

But he added: 'Asda's latest drop in petrol prices effectively passes on the recent fall in wholesale prices, underlining just how far other major fuel retailers are dragging their feet on price reductions.

'Towns with Asda filling stations will see prices at neighbouring fuel stations drop to compete.

'Those without will be hostage to whenever fuel sellers finally decide to pass on wholesale reductions.'

RAC motoring strategist Adrian Tink said the price cuts were 'a welcome step in the right direction' noting  motorists could now save up to £5 per fill up: 'Let's hope the other retailers follow suit.

'But let's not kid ourselves, prices are still too high and motorists are still feeling the pain at the pumps.'