Walsall petrol station one of cheapest in UK as it drops prices to below £1

For the first time in more than five years, that is now happening.

A forecourt in Walsall is one of the first in the country to drop the price of a litre of unleaded to a 99.7p and its owner claims it is 'greed' that makes others not do the same.

Supermarkets have begun to follow suit but there were warnings the discounting might not last as the AA dismissed it as a 'publicity stunt'

The average UK price of unleaded petrol £1 per litre for the first time in November 2007.

Record global oil prices, which increased as a result of supply concerns and the weak dollar at the time, continued to rise.

Then there was the tax on fuel as well.

The cheapest litre in the West Midlands could yesterday be found at Ablewell Filling Station, Walsall, part of the Harvest Energy brand of forecourts.

As a result, the big four supermarkets cut the price of their fuel again.

Asda, Morrisons, Sainsbury's and Tesco knocked a further 2p off their petrol and diesel.

The Tesco cut took effect yesterday while the reductions by the other three companies kicked in today.

For Asda customers, the latest reduction means they will pay no more than 103.7p a litre on petrol, with diesel at 110.7p a litre.

Ablewell Service Station owner Velautham Sarveswaran said: "We have been following a business model where we strive to be the cheapest forecourt wherever we are and we will continue to help the motorist when we can.

"We have to work within our profit margins and when the customers ask us how we're able to keep our prices so low we tell them that it's because we're not greedy."

Prices have also dropped at his forecourts in Redditch and Kings Heath.

But the AA said that, although welcome, the reduction 'appears to be a publicity stunt rather than a reflection of general pump prices'.

AA president Edmund King said: "There remains a postcode lottery out there when it comes to fuel prices. Drivers in rural areas are still paying much more than the £1.09 average price and in some places £1.18.

"It will still take some time to get down to an average of £1 per litre, particularly as 70 per cent of the pump price is tax (57.95p duty and 18.3p VAT)."

Gavin Williamson, MP for South Staffordshire, said he wanted to see prices come down everywhere.

He said: "Fuel duty has been frozen and we've done away with the planned increases Alistair Darling had drawn up before Labour left office. But what does still worry me is the wide disparity across the country. You can have supermarkets in the same change charging different prices just a few miles away from each other."

Simon Wallis, owner of the Wall Heath Service Station on the Kidderminster Road said the price of their petrol has now reached 106.9p and their diesel was now at 114.9p.

Mr Wallis, who has been in the business for 20 years, said six months ago he would not have predicted the sudden fall.

"It has been going on for months now, and the price just keeps on falling," he said.

"It was quite severe over December if you take Christmas out of the equation. The price has dropped by at least 24p and it just keeps falling.

"I would expect to see it level out at around 99.9p but you just cannot predict it - it has to level out eventually otherwise it would just not be cost effective to get the oil out of the ground.

"Right now though it is good news for customers and good news for us as tankers are cheaper to get. Before the price of crude oil collapsed a tanker was around £60,000 and now one comes in at £40,000 instead.

"It is good news and it does put a smile on the customer's faces. I can't say for certain when it will all level out, however."

But Mr Wallis said the Wall Heath Station is not currently yet able to go below £1 per litre.

"I'm not ruling it out," Mr Wallis said. "I've seen a few garages who are advertising petrol for under a pound but it is just not possible for us yet."