PETROL prices plummeted by nearly 7p a litre last month – the sixth biggest monthly drop since 2000.

But drivers should have seen a further 10p reduction if retailers squashed their margins, according to RAC Fuel Watch.

The price of petrol fell from 169.58p a litre to 162.89p a litre in September – saving drivers £2.68 on an average full tank.

Since unleaded peaked on July 3 at 191.53p, almost 29p has come off a litre leading to a saving of nearly £16 on a tank.

Diesel prices also dropped from 183.74p a litre to 180.16 in the same period.

This is 19p cheaper than its all-time high price of 199.09p back on June 25 – meaning that the cost of a tank has fallen by £10 on average.

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But according to RAC Fuel Watch, motorists should be seeing bigger cuts at the fuel pumps.

RAC fuel spokesman Simon Williams said: "Despite September seeing the sixth biggest ever drop in the price of petrol, drivers really should have seen a far bigger drop as the wholesale price of delivered petrol was around 120p for the whole month.

"This means forecourts across the country should have been displaying prices around 152p given the long-term margin on unleaded is 7p a litre.

"In stark contrast to this RAC Fuel Watch data has shown margins to be around 17p a litre – a huge 10p more than normal.

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"While there are no rules on what retailers can charge for their fuel, it remains the case that the supermarkets are extremely influential in determining the UK average pump prices as they sell so much fuel."

The RAC said motorists shouldn't avoid smaller petrol stations as these often undercut the prices offered at supermarket forecourts.

Mr Williams said: "We would urge everyone to shop around for the best deals rather than simply assuming the supermarkets are the lowest because they have been in the past."

The news comes after the falling value of the pound fuelled further costs at the pump.

How can I cut fuel costs?

There are ways to save an extra 5p per litre if you sign up for major supermarket loyalty schemes.

Esso has partnered with Nectar for its loyalty scheme and you can get 5p off a litre when you swap 300 Nectar points.

Drivers with a BPme rewards card will get one point for every £1 they spend in-store or on a litre of regular fuel at a BP garage.

Motorists will get £1 off their fuel or shopping for every 200 points.

Texaco, Shell, Sainsbury's and Tesco loyalty card holders can also get money off their bills.

You can also cut fuel costs by driving more efficiently. This can be achieved by:

• Accelerating gradually without over-revving
• Always driving on the highest possible gear
• Allowing your car to slow down naturally as your brake

There are also sites you can use to help you find the cheapest petrol prices near you, like PetrolPrices.com and Confused.com.

These allow you to search the prices of UK petrol stations.

All you need to do is enter in your postcode and tell it how far you want to travel (up to 20 miles).

It's also so easy to forget about the clutter building up in your car – whether it's tools, kids' toys or general rubbish.

But it turns out additional storage space can increase fuel costs by a whopping 12%.

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So, don't forget to do a car clear-out every now and then.

And, if you're driving at a slower speed, think about taking the roof rack off and switching off air-con to save on running costs.

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