Asda petrol stationJohnny Green/PA Archive/Press Association Images

Asda has fired the latest salvo in the supermarket fuel price war, by cutting the price of a litre of fuel by up to 2p today. It means that Asda petrol is capped at 134,7p a litre and diesel at 139.7p. The other supermarkets quickly followed their example with cuts of their own.

The ongoing battle for the cheapest fuel makes it feel like we're getting a great deal, and the ruinous price of petrol is coming back under control. However the experts warn that this is all a mirage. The price of petrol at the pump should in fact be far lower.

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The cut

Announcing the latest cut, Andy Peake, Asda's director of petrol trading, said: "We're chuffed to be offering a third price move in as many weeks to hard-pressed motorists running on empty."

He has a point. The supermarket fuel price war has seen a very public lowering of prices in recent weeks. The last round of cuts was kicked off by Asda over the Bank Holiday. It was swiftly followed by its supermarket rivals. At that point the prices had already fallen 4p in three weeks.

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All this came alongside promotions for shoppers, including Tesco which is offering 5p a litre off for those who spend £50 or more in store, leaving many drivers with the unnerving and unusual feeling that they aren't being ripped off on the forecourt.

Rip off

However, the AA says we shouldn't take all this at face value - and in fact we're being ripped off even more than when the price war began.

A spokesman points out: "The wholesale price hit a record in early April, and we saw that feed through to the pumps and hit a record of 142.48p on 16 April. Since then, we have seen a fall in the wholesale price which equates to a drop of 10p. At this point if we were seeing retailers respond to falls as fast as they did to rises, we should have seen a 7p fall at the pump. In fact, the price has dropped to 139.78 today - which is a fall of just 2.5p."

He says some independent retailers have spotted an opportunity and dropped prices by 5p. Likewise Asda is working to be the cheapest in its markets. However, he says: "The rest of the retailers are just following Asda, as and when they need to. It's the same old story, when the wholesale price rises, the price at the pump shoots up, but when it falls, the retailers only bring down the price as slowly as they want to. It's unacceptable at a time when the economy and the high street is taking such a battering because so much spending is being siphoned off by the price of petrol."

The AA is calling for more transparency so that drivers can see if they are getting a fair price at the pump. In the meantime, the spokesman says, the only approach drivers can take is to ensure they are being ripped off as little as possible, by seeking out the cheapest petrol in their area.

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