The crash in fuel prices has accelerated with two rounds of 2ppl price cuts by the big four supermarkets in six days. Unleaded petrol and diesel prices have fallen by 21ppl and 17ppl in less than four months.
On January 6, Asda announced its new national price cap was 105.7ppl on unleaded petrol and 112.7ppl on diesel, its lowest fuel prices since summer 2010.
However, the AA dismissed the likelihood that the average petrol price could fall below £1 a litre, but said the crash in fuel prices over the past month is the third largest it has recorded.
In its monthly fuel report the AA said: "The possibility of the average petrol pump price falling below £1 a litre in the near future remains remote. Fuel duty + VAT alone accounts for almost 70ppl. A further 5ppl to 10ppl for retailer/suppliers margins + VAT, leaves wholesale +VAT needing to be around 20ppl to 25ppl.
"With wholesale petrol including VAT currently at around 33ppl, the wholesale price would need to fall at least a quarter for the average petrol pump price to approach the £1 mark with a further hefty fall in the oil price to help make that happen.
"Market experts have told the AA that this would require oil to drop to around $40 a barrel, a third lower than it is now."