PETROL prices fell below £1 a litre for the first time since December yesterday, bringing welcome relief for consumers hit by the credit crunch.
The oil giant BP and the supermarket chains Asda and Morrisons cut the price of a litre of unleaded petrol to 99.9p.
During the worst of this year's price rises, unleaded soared to more than 120p a litre and diesel to over 130p.
The price of o
il on world markets has fallen from a high of about $147 a barrel earlier this year to a 14-month low of around $75 yesterday.
Asda, which cut its petrol price from 104.9p a litre, 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. Sainsbury announced it was planning to cut its prices today.
Damien Cox, a senior analyst at energy adviser John Hall Associates, predicted further falls as the outlook for the worsening economies becomes clearer over the next few 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."
Adrian Tink, RAC motoring strategist, welcomed the price cuts. "Finally, we have a bit of respite for Britain's hard- pressed motorists. For the past year, they have been paying over £1 a litre for petrol. This has hit Britain's motorists hard in a tough economic climate, with the average motorist spending over £1,300 a year to fill their tank," he said.
"At least that figure should start to come down now and motorists will see a significant difference in their wallet when they next visit the forecourt."
However, he said there were often "huge" regional differences and called on retailers throughout the UK to bring their prices to below £1 a litre.
Edmund King, the AA president, said the government should not use the cuts as an excuse for a rise in fuel duty.
"We suspect that these new prices are right on the edge of, if not below, the point that retailing petrol remains profitable. This will be hard for other retailers to match, although falling fuel wholesale prices from reduced demand and cheaper oil will catch up.
"The AA's only concern will be the continued disparity in cheapest supermarket prices between neighbouring towns."
Meanwhile, British Airways and Virgin said they were reducing passenger fuel surcharges on long-haul flights for economy and premium economy seats. The charge for BA's business and first-class passengers and for Virgin's upper class travellers remains unchanged.
• Proposals which would have seen biofuels making up 5 per cent of the UK transport fuels by 2010-11 have been delayed until 2013-14 because of concerns about their impact on the environment and the price of food, it emerged yesterday.
The full article contains 501 words and appears in The Scotsman newspaper.
