Fuel prices drop in supermarket war

Motorists have received another boost as the supermarket fuel price war escalated again yesterday although there are growing fears that the discounting could drive independent fuel stations out of business.

Supermarket chain Morrisons dropped the price of unleaded and diesel by 2p, taking the price of a litre of unleaded from the supermarket's forecourts below 110p and diesel under 125p. The UK average is 114.0p for unleaded and 126.3p for diesel.

Morrisons said the move would mean drivers would pay on average 5 less to fill up their tank than they did three weeks ago

Tesco responded to the latest move by pledging to match the lowest prices in the local area at all its forecourts. Asda also said it would cut 2p off the price of a litre of unleaded petrol and diesel.

However, the Petrol Retailers Association warned that more than 500 fuel stations could close this year as smaller forecourts are squeezed out of business by the credit crunch, and the escalating supermarket price war.

As a result, they said, more than 2500 staff were likely to be laid off at filling stations.

The number of forecourts has been in steady decline since the 1960s when there were almost 40,000 nationwide. There are expected to be fewer than 9000 by the end of this year.