Motorists in the outback NSW town of Broken Hill swarmed service stations over the weekend to buy up some of the cheapest fuel seen in years.

An impromptu price war between two stations saw the $2-per-litre for petrol drop to as low as $1.30 and the price of diesel plummet to just 55 cents.

“We just kept it for one day, just for a promotion, as a bit of friendly competition,” Argent Street service station owner Priyanshu Reddy said.

The two stations served more than 2,000 motorists – more than 12 per cent of Broken Hill’s population – in less than 18 hours and by the end of the filling frenzy the bowsers had run dry.

“Normally we are the cheapest competitor in Broken Hill,” Beryl Street service station owner Arvind Ramidi said.

“All of a sudden the other servo started matching the price and 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.

Cheapest diesel on record

The two businesses took turns lowering their prices two cents at a time and observers posted the drops on social media.

The Beryl Street service station had sold out of diesel by sunset and petrol by nine o’clock the following morning.

The Royal Automobile Association, which has kept records of petrol prices across the South Australian and Broken Hill council areas since 2008, said records were broken.

“I don’t think we’ve ever seen diesel prices at 55 cents,” future mobility senior manager Mark Borlace said.

Competition lacking in regions

Mr Borlace said it was refreshing to see price matching among petrol stations in a regional area.

“It’s good that there’s competition happening in the regional cities … they’ve long suffered from a lack of competition,” he said.

He said petrol stations often held price wars with competitors as a marketing ploy to generate customer loyalty.

“Sometimes it’s about reminding people that they’re there … getting a bit of market share to get their volumes up, or it can be a part of awareness strategy to get attention,” he said.

Mr Borlace said the action in Broken Hill showed how much strain the fuel price hike was putting on Australians.

“It shows how critical fuel is in the household budget,” he said.