U-turn as Esso drops price rise

Oil giant Esso said tonight it was scrapping petrol price rises brought in at the peak of the fuel crisis.

Oil giant Esso said tonight it was scrapping petrol price rises brought in at the peak of the fuel crisis.

The company said it would reduce them to the level before Tuesday's increase of 2p per litre on unleaded and 4p per litre on diesel.

A statement from the company said: "We recognise that the timing is regrettable and in the spirit of the present efforts by everyone to restore supplies, Esso announces that we are now taking steps to reduce prices back to the level they were before the market moved.

"Specifically, we shall move our recommended prices to the level they were before Tuesday's price rise."

The hike had been branded "another kick in the teeth" by angry hauliers while Prime Minister Tony Blair also turned on Esso saying he could not understand why forecourt prices were going up when world prices were falling.

TotalFinaElf also announced a rise on unleaded petrol up by 2p per litre and diesel up by 4p per litre but declined to comment tonight on whether it was following suit.

Mr Blair led the attack at lunchtime saying: "I really cannot understand that Esso decision. I mean, the world oil price, as far as I'm aware, has actually come down in the last few days."

The price of Brent Crude has fallen from a high last week of 34.60 US dollars a barrel and was trading at 31.82 US dollars a barrel today, having opened this morning at 31.70 US dollars a barrel, according to the International Petroleum Exchange.

Esso, which supplies 1,600 service stations nationwide, had blamed the initial rise on "high crude and finished product prices" which it said had squeezed unsustainable margins.

TotalFinaElf said its rise had nothing to do with the current fuel crisis.

A spokesman said: "On Friday the price of unleaded was 79.9p per litre on average and that went up at the weekend to 81.8p per litre for Monday. Diesel was 81.9p per litre on average on Friday and went up 4p to 85.9p per litre for Monday.

TotalFinaElf declined to comment on whether it would follow Esso's lead in scrapping price increases.

Announcing the reduction Esso said it would be implemented as soon as "practically possible" and a further increase would not be considered until it was "satisfied" that a fully competitive market had been re-established.

"Customers will then be able to judge prices for themselves in a fully competitive market in which Esso will maintain its Pricewatch pledge," the statement said.

The cost of unleaded petrol was going to revert back to the "average" price for 79.9p per litre and diesel at 81.9p per litre, a spokesman for the company added.

Oil company Shell said it would absorb any losses itself.

The company's chairman Malcolm Brinded said: "I cannot comment on the rest of the industry but we've held our prices constant since before the dispute started."

Any losses would be absorbed by Shell. BP said it would not be raising fuel prices.

"I don't think we have put the prices up in the last two days and, whilst we are looking at the situation carefully, we have no immediate plans to raise prices," a spokesman said.

The Esso decision was welcomed by motoring organisations which said the moved was "welcomed".

An AA spokesman said: "I think it was a bad decision and I'm glad they have had a chance to reflect and registered the fact that the reason we have had all these protests is because of the high prices.

"The rise at such a delicate end of the crisis is not going to go down well with motorists or protesters so we are obviously delighted that they have had a change of heart and we welcome the move," he added.

A spokeswoman for the Road Haulage Association welcomed Esso's "climbdown" over its price increases and hoped other companies would follow suit.

She added: "This is a very sensitive time and such an insensitive move by an oil company does not help."

RAC Foundation spokesman Edmund King said they were "delighted" with the announcement.

"We are delighted that they have actually seen sense because their action was beginning to fuel the flames of the protest yet again and it was totally outrageous to consider increasing fuel prices on a day when the world fuel prices were decreasing rather than increasing.

"We are glad we have managed to shock them into making these cuts and we ask them to consider the plight of many thousands of motorists out there and be a bit more sensitive in future," he added.

Protesting truck drivers at Coryton refinery in Essex said tonight that they will ask every driver of a Total tanker to turn back as long as the company failed to confirm it will not increase fuel prices.

Andy Cox, who has become the spokesman for the group of 20 protesters outside the refinery, said: "We will ask them to turn around in a bid to put pressure on Total to confirm they will not raise fuel prices.

"If there is any essential services fuel to come out BP can take it. We have no argument with them now."