Motorists in Northern Ireland are set to reap the benefits of another fierce fuel price war, after a painful 2008.

Tesco and Asda have slashed 3p off the cost of both petrol and diesel, offering a welcome boost to the coffers on New Year’s Day.

The move comes a day after the AA motoring organisation revealed the price of petrol had hit a three-year low. Unleaded now costs 82.9p at the majority of Ulster’s supermarket forecourts, while diesel has fallen to 94.9p — a level last seen in April 2007.

And it’s a far cry from the dark days of July when petrol and diesel rocketed to record highs of over 120p and 130p respectively.

AA public affairs spokesman Luke Bosdet said the latest reductions — which reflect the sharp slump in the price of oil — are good news for drivers everywhere.

“As we move into 2009 with the outlook looking very grim and grey, lower fuel prices are the only bright light on the horizon for many people,” he said.

“People looking for jobs may have to travel to get them and buying fuel at 82.9p a litre, as opposed to 120p, is a huge benefit.”

The economic downturn wrecked havoc on households across the province this year, with unemployment and the rising cost of living causing problems for hundreds of families.

In July the price of crude oil soared above $147 a barrel. Oil has now crashed to below $40 a barrel — with retail giants slashing pump prices to reflect the tumbling wholesale cost.

And since prices peaked mid-summer, both petrol and diesel have fallen by over 30p a litre.

Tesco Northern Ireland director Gary Mills said the cuts should help ease budget worries.

“There will be lots of people waking up on New Year’s Day worrying about what 2009 means for their finances and for many the cost of motoring will be a significant factor,” he said.

“I’m delighted that Tesco can help a little by cutting fuel prices across the country and also saying thank you to customers with extra Clubcard points which they can then use to save even more money off their weekly shop.”

An Asda spokeswoman said: “Asda has never been beaten on petrol and diesel prices and starting from today will be matching Tesco’s price cuts at all of its seven Northern Ireland forecourts.”

Sainsbury’s has not yet weighed into the fuel price war. James Tan, head of petrol, said: “Our petrol prices are among the lowest in the country and our customers can be confident that whenever they fill up with us, they are getting the best possible value.

“We constantly review our pricing versus the local competitors and will ensure our customers get a competitive price locally for their petrol.”

The AA said the average UK petrol price on Tuesday was 87.64p a litre, with the average cost of diesel sitting at 99.59p.