A LARGE discrepancy in fuel prices at Tweed Heads South is due to a new independent United Petroleum service station opening, according to the NRMA.

There was a massive 25.4c per litre difference in fuel prices between two Tweed service stations less than a kilometre apart last night, with no change this morning.

The 7-Eleven and Caltex Woolworths at Minjungbal Dr, Tweed Heads South are just metres apart and yet the 7-Eleven's advertised price for E10 fuel was 153.9, while Woolworths was 128.5.

NRMA head of media Peter Khoury said the opening of the United service station in Minjungbal Dr had triggered Caltex Woolworths' move to undercut competitors.

"When the independents come in the major players try and compete with them," he said.

"Often it's because there's more competition in the market."

Mr Khoury said trends showed prices are generally lower in areas with independent service stations.

"When there are more independents prices become more competitive," he said.

But Mr Khoury warned there were many unanswered questions about fuel pricing and competition in Australia.

"In essence each town is its own market," he said.

"The challenge you have is there are unanswered questions in the fuel industry."

A Woolworths Petrol spokeswoman said the price of fuel at their outlets reflects the cost of doing business, infrastructure and local competition.

"Woolworths Petrol is a price follower, our outlets will only raise or reduce their prices following moves by competitors in the local marketplace," she said

"In this case we have matched the price of a competitor in the local area."

My Daily News is waiting for comment from 7-Eleven.