Some service stations around the country have dropped petrol prices to below $2, with BP making its 10th reduction since October.

The move has taken 91 Octane to under $2 a litre at company owned sites across the country.

BP has decreased all grades of petrol by 3 cents per litre and diesel by 2 cents, bringing the price of 91 Unleaded to $1.99 per litre and diesel to $1.33 per litre at most BP owned service stations, reports Stuff.

BP communications manager Jonty Mills told Stuff it was the first time for two-and-a-half years that petrol has been under $2 per litre nationally.

'We acknowledge that in some highly competitive hot-spots, it has been under $2 for some time but we are a national player and this is a national reduction.

'The continued downward trend in the cost of product on the international market continues. It's a simple case of supply outweighing demand.”

Automobile Association spokesperson Mark Stockdale says nationwide petrol prices have fallen below $2/litre for the first time in two-and-a-half years.

'Commodity prices haven't fallen any further (in fact import costs has risen slightly with a drop in the exchange rate), but rather margins were still above average after the last cut on December 1 so fuel companies hadn't passed on all of the cost reductions quickly enough.

'Even with the current reduction, margins are still at high levels, especially for diesel, so AA PetrolWatch anticipates pump prices may still fall further – provided the NZ$ doesn't fall. Shop around, because some service stations are retailing petrol below $1.90/litre, or even less with dockets or AA Smartfuel.”