Where you’ll find the cheapest petrol in Australia

With predictions petrol could soon reach more than $2 a litre, there is one place in Australia where it is ridiculously cheap.

A friendly feud between two local service stations in outback NSW led to some of the cheapest petrol prices in the country.

The price war between the two Broken Hill businesses prompted thousands motorists to swarm to their bowser's last Friday and pay as low as $1.30 for unleaded petrol and just 55cents for diesel.

Both service stations tried to beat each other with the cheapest petrol, each cutting back prices two cents at a time.

In less than 18 hours, the businesses combined served more than 2000 motorists and continued to sell the fuel at low prices until they sold out entirely.

A “friendly” price war between a Liberty and Metro Petroleum service stations saw prices as low as $1.30 for unleaded petrol and just 55 cents for diesel. Picture: NCA NewsWire / Dean Martin

Argent St service station owner Priyanshu Reddy told the ABC the promotion was kept in place for one day for some “friendly competition”.

But his competitor from the Beryl St service station said the other business started to price match.

“Normally we have the cheaper fuel price but then the Liberty started matching the price and they normally don’t do that,” owner Arvind Ramidi said.

“I called our head office and they told me I could lower our price by two cents so we just kept going down, down, down until we sold out.

“(The cars) almost lined up to one km.”

He said his Metro Petroleum service station had sold out of both the unleaded petrol and diesel within just 10 hours.

The prices in Broken Hill have since risen to usual prices, hovering around 186 cents per litre.

The Metro Petroleum service station sold out of both the unleaded petrol and diesel within just 10 hours during the price war. Picture: NCA NewsWire / Luis Enrique Ascui

Mark Borlace from the Royal Automobile Association — that services road users in South Australia and Broken Hill — said the wholesale price sat at around $1.79 so selling anything lower than that meant the businesses were losing money.

But he said service stations sold fuel for cheap as part of a marketing strategy for the business, otherwise “they’d go broke very quickly” if they continued to sell fuel a those discounted prices, especially when 43 cents of it is taxed by the government.

“Service stations have evolved over the years to make profit from fast food, groceries and drinks so they’re prepared to cop a loss on petrol just to get lots of people through and raise the profile of the business to customers who may not have used them before,” Mr Borlace said.

“Broken Hill has a history of not having a lot of competition within the town.”

He encouraged all road users to shop around for the cheapest price because it could impact the behaviour of oil companies.

Petrol prices are expected to soon rise even higher than $2 a litre.