FUEL prices are nudging ever-closer to the £1 per litre mark as prices continue to fall across the area.

Prices at the pump have dropped by several pence in recent weeks, giving a welcome boost to both commuters and holiday-makers.

At Tesco in Branksome, diesel costs just 106.9p per litre with unleaded petrol a penny more expensive.

At Tesco in Castle Lane East, Bournemouth, both petrol and diesel are on sale for 109.9p per litre, 6p less than just last month.

The same price is being charged at Esso in Barrack Road, Christchurch with Shell at the other end of the road charging 111.9p for unleaded and 110.9p for diesel.

At BP in Palmerston Road, Boscombe, petrol is 110.9p and diesel 108.9p, matching the price at Shell in Holdenhurst Road, Bournemouth.

It's the first time that diesel has been cheaper than unleaded petrol for 14 years and the reduced cost has prompted a price war among the supermarkets.

It's more than six years since the price of both petrol and diesel were under £1 when crude oil cost $53 a barrel.

The cost of crude oil is currently just $46, prompting speculation that prices could fall still further.

But there are fears that high levels of taxation could stop prices dipping under £1 - roughly 68 per cent of the pump price is tax, according to the RAC.

Director of the RAC Foundation, Steve Gooding, said: "The cost of oil isn't the only driver of what we pay at the pumps, but with crude now trading at its lowest level since March 2009 it is no surprise that the price of petrol and diesel is on the slide.

"This raises further the tantalising prospect that at least some of the nation's 37 million motorists might soon be getting change from a quid when they buy a litre of fuel.The very least they can expect is that both refiners and retailers continue to pass the savings they are enjoying on to their customers."