UK motorists will be in a good mood today with the news that a number of major supermarkets have said they will lower the price of petrol.

Asda say they will cut the price of unleaded petrol and diesel by 3 pence per litre, while Morrisons said it would cut both prices by 4 pence a litre. Sainsbury’s said it would cut the price of unleaded petrol and diesel by 5 pence if customers spend £50 or more on food in store.

As crude oil prices hit record levels, the price of fuel has increased rapidly. However, while oil prices rose at the start of the month, they have fallen recently.

Asda said the price reduction would be effective from Tuesday, making unleaded petrol 113.9p per litre, while diesel would cost 128.9p.

Asda;s trading director, David Miles, said: “We are seeing a more stable reduction in oil prices, allowing us to pass on the savings to customers. We urge other retailers to follow our lead at a time when customers need as much help as possible.”

Morrisons said its price change will come into effect on Monday “ensuring customers reap the benefit by passing on the saving quickly, for cheaper prices at the pump”.

Sainsbury’s said its fuel promotion would start on Thursday 24th of July and end on Thursday 7th of August.

Sainsbury’s explained in a statement that: “Our customers can reap an even bigger reward because we are running a 5p off per litre promotion when they spend £50 or more in-store and they will earn Nectar points as well.”

The AA said that wholesale gasoline prices had fallen 6 percent since mid-July, and hopes that other fuel retailers will follow the supermarkets example and cut fuel prices.

“The AA expects fuel suppliers to pass on, not pocket, the saving for the good of UK families, hauliers and the economy,” said AA president Edmund King.

“Should fuel suppliers and retailers appear to be dragging their feet we will seek to expose this.”

Although oil prices dropped in recent days the expectation is that they will remain high.

Talks between tanker drivers and those who employ them are to be resumed today in an effort to prevent another strike taking place next weekend.

The strike – by 640 drivers employed by hauliers supplying more than 900 Shell garages - ends at 6am on Tuesday. Petrol retailers say there is enough fuel in the pumps to outlast the action.

After eleventh-hour talks broke down last Thursday night, the situation appeared deadlocked, but the re-opening of talks over the pay-dispute is encouraging.

Bernie Holloway of Hoyer UK, the largest of Shell’s suppliers, said: “We are pleased that this step forward has been made and will make every effort to draw these talks to a successful conclusion.”

John Hutton, business secretary, praised UK motorists: “Although the strike has inconvenienced motorists, they have shown commendable common sense and restraint which has minimised its harmful impacts.”

The Petrol Retailers Association had earlier said that most forecourts remained open over the weekend and that they should have enough fuel to last out the final day of the strike, which ends at 6am Tuesday.

Shell claims only 8 percent of their 8,838 petrol stations across the UK had been affected “by shortages of one or more of fuel grades”. The company did warn motorists that “with another day of strike still to come, it is inevitable that in time we will continue to see more difficulties with supply”.

The drivers union Unite has rejected a pay offer of 7.3 percent this year and 6 percent next year which would raise the 640 drivers’ average annual earnings to “around £41,500”.

Unite is demanding a 13 percent rise this year, and claims Shell is to blame for holding down contract prices and curbing pay rates for drivers because the company outsourced transport in the 1990s.

Unite joint general secretary Tony Woodley, said Hoyer and Suckling did not have the money to settle the union claim because Shell was being “greedy”. He said tankers were the equivalent of “mobile bombs” and drivers deserved higher pay.

Hoyer insists its pay rates are competitive. It says drivers have had rises of 27 per cent over the past four years – twice the rate of inflation.

Today marks the start of a strike by tanker drivers who deliver fuel to Royal Dutch Shell petrol stations in the UK, after last-ditch talks over a pay dispute disintegrated last night.

The drivers, who rejected last-minute pleas from Prime Minister Gordon Brown to call off the action, have halted the supply of fuel to about 1000 Shell garages – which is around 10 percent of the UK’s 9,500 petrol stations.

Shell garages will run out of fuel “almost immediately” according to Len McClusky, the assistant general secretary of Unite, the drivers union, adding that all of the oil companies’ forecourts will be affected within 24 hours.

The union decided to strike would take place after they rejected a 7.3 percent wage rise this year, from the haulage companies Hoyer UK and Suckling Transport, the sole suppliers to Shell garages.

To try to appease the drivers, a second offer of a 7.3 percent rise followed by a 6 percent increase next year was offered, which would increase annual average earnings “to around £41,500”, but it was also rejected by the union.

Unite now plans to picket oil terminals, including Ellesmere Port on Merseyside and Grangemouth in Central Scotland, to prevent supplies getting through to Shell garages.

The Petrol Retailers Association has appealed to the public to avoid panic buying, which could make the situation worse, and say that there is sufficient fuel at rival garages to supply motorists. They also noted that Shell would have had enough time to ensure their own storage bunkers were as full as possible.

The industry is privately irritated at the intervention of the prime minister, who they believe has encouraged panic buying by exaggerating the threat to supplies.

Mr Brown, speaking at his regular press conference in Downing Street, refused to rule out calling in the army to keep fuel flowing. He warned that the government was willing to do “everything we can” to ensure petrol pumps don’t run dry. 

Bernie Holloway, a company spokesman, said: “We offered a substantial amount to the drivers. We extended our offer to the very limits that our business could sustain. We are disappointed that our improved offers have been rejected. Unfortunately, it looks likely now that there will be a damaging and costly strike.”

Unite, who were hoping for a 13 percent wage increase this year, claim that drivers’ pay had effectively stagnated since Shell outsourced its delivery operations in the 1990s. Unite also claimed that provision had “been made for fire, police and the emergency services”.

Mr McCluskey said: “Shell’s failure to intervene in this dispute means that Shell’s drivers have no alternative other than to go ahead with strike action, beginning on Friday June 13th 2008.

“This dispute could have been resolved if Shell had advanced a fraction of the billions of pounds in profit they make every month.”

Britain could start running out of fuel this weekend. The threat of a four-day strike by tanker drivers has caused ministers to activate emergency procedures with the oil industry.

John Hutton, business secretary, has ordered officials to draw up contingency plans because of fears the strike could prompt much more widespread fuel shortages than those caused by the strike at Grangemouth oil refinery in April. Industry executives believe these fears are well founded, and said they were working with the government to implement measures to minimise disruption.

The emergency measures were discreetly activated last Friday so as to reduce the risk of panic buying, and would safeguard fuel for emergency services and provide for supplies to be moved around the country to areas of shortages.

After their claim for a 13 percent pay rise was rejected, around 500 drivers employed by Hoyer UK and Suckling Transport is threatening to strike for four days from Friday.

The two companies are sole suppliers to almost 1,000 Shell forecourts, which are concentrated in the south-east, the north-west, central Scotland and parts of the midlands.

Mr Hutton fears that striking drivers could picket distribution depots used by other companies, leading to wider disruption.

“It is difficult to gauge what the impact of the strike would be if it went ahead,” the Department for Business said. “Shell accounts for about one in 10 filling stations and it is inevitable there would be some stock-outs.

“If the strike were to affect other retailers, it would have a more significant impact. The government is working with the wider fuel industry on what could be done to reduce any disruption to the public and business.”

Shell said on Monday night: “We are doing everything we can to avoid and minimise the impact of Unite’s industrial action.”

Mr Hutton is hoping that union and employers can resolve their differences at Acas, the conciliation and advisory service, when they meet for talks later this week. He says he accepts the need to strike a balance between preparing for fuel shortages and causing public panic.

The emergency measures include a suspension of anti-cartel rules to allow oil companies to exchange information about stocks.

The current driver salary sits at around £36,000 with the haulage companies offering to raise it by 6.5 percent. Hoyer says it is “disappointed” by the reaction of Unite, the drivers’ union. It says it has increased pay by 27 percent in the past four years.

The union, however, blames Shell for putting pressure on hauliers to keep wages down. It says the average salary of £36,000 includes a lot of overtime.

The government may unpick another aspect of the budget by reversing proposed new duties on motorists and hauliers already hit by rising fuel prices after Gordon Browns ministers yesterday paved the way for a new tax retreat.

While hundreds of lorry drivers blockaded streets in London, ministers signalled that Chancellor Alistair Darling would take pity on road users when he draws up his pre-budget report in the autumn.

Members of Mr Darling’s team said he was “listening carefully” to Labour MPs and others on whether to press on with plans to increase fuel duties by 2p a litre in the autumn and for a controversial reform to vehicle excise duty.

Having already been forced to water down his plans to reform capital gains tax, the chancellor held an emergency £2.7bn mini-budget, this month, to compensate losers from the abolition of the 10p tax band.

However, as fuel prices soar and household budgets tighten, Mr Darling’s aides insist he is “very aware” of concerns raised by Labour MPs and motoring organisations. The chancellor’s team realise that any retreat on the road tax plans in particular would be seen as another humbling U-turn.

But one of Mr Darling’s allies said: “If it’s the right thing to do, he will do it.”

According to Grant Thorton, the accountants, if oil prices stay at their current highs due to North Sea oil revenues, the Treasury could fund the scrapping of the proposed 2p increase in fuel duty and its new tax on larger cars, and still beat the relevant revenue forecasts over this financial year by more than £4bn.

A commons motion calling for rethink on the road tax plan has been signed by 35 Labour MPs. The plan - under which larger family cars, including models bought since 2001, would see a sharp rise in vehicle excise duty. Labour MPs have claimed that the plan to increase taxation for older family cars would hit poorer families and undermine the government’s claim to be on the side of hard-working households in difficult times.

Insiders at Downing Street say a retreat on the VED plan was not under “active consideration” but pointedly refused to say whether it would survive in the chancellor’s autumn pre-budget report. Under the plan, cars with higher emission levels would be charged a higher level of road tax.

Justice Secretary, Jack Straw said in an interview, “The chancellor and prime minister have said quite explicitly we are listening to public concerns about this and – if there are going to be decisions announced – they could be announced in the autumn.”

John Hutton, business secretary said, “The chancellor is listening to what people are saying about VED, as he has done on a number of occasions recently about tax rises.”

Labour MPs are now expected to scrap completely, the proposed 2p fuel duty rise, which was proposed by Mr Darling by six months until the autumn.

Across Europe, the impact of rising fuel prices is a growing problem. Yesterday, French president Nicolas Sarkozy, suggested a cap on sales taxes on fuel to try to hold prices down.