I have known this guy for a year now, we drink in the same pub and sit together at the bar each time we are in. Once or twice a week. I fancy him like mad, but act quite cool towards him. I am very friendly but have not given him any indication that I fancy him. (At least dont think I have) He always seems happy to see me, especially if I arrive later than normal, his face lights up.

This is not conclusive because he could just admire you as a friend.  He maybe be bored and then you walk in and he sees some entertainment.

He buys me drinks but it never goes any further than that.

He must value you a fair bit to regularly buy you drinks, whether as a friend or as a potential girlfriend.

I live very close to our local, he always travels by car and lives about 8 miles away.

That is quite a distance to travel to the pub (16 mile round trip), there must be something there that attracts him to the pub.

So he never has that extra drink to give him courage, if he was to need courage! (I have never asked him back to mine, as I dont want to start anything up by him thinking he can just come back to my place)

I know I say in many of my articles, not to invite any guys back for sex in the early stages of a relationship or even before a relationship starts.  But there are ways to get him to go back to your place without the necessity to have sex.  Like he might be good with computers, he might be a plumber, in which case he could fix either your plumbing (sounds a bit naughty) or your computer.  Or he might mention a DVD he wants to see, in which case you tell you have that DVD, do you want to come round and watch it, later in the week.

He is often the first one to leave when we are out, after he has had his drink limit.

Sounds like a decent bloke, not many stick to their drink limit.

I feel that he should have asked me out by now, and still have hope. My friends think that he is obviously not that into me.

If they have met him with you present and have made that judgement, I think friends are often a pretty good judge.  If they haven't met him many times in your presence then I wouldn't rely on their opinion too much.

But I have different views, as he once said that he liked to get to know someone well and was very slow at warming to a person.

There are very cautious men.  Particularly men that have had bad experiences with women in the past.  I tend to go on quite a bit about the bad men out there, but believe me there are some women that are just as bad.  For this reason some men, tend to be a bit cautious.  I think it is safe to say that these men take a lot of convincing before they get into a relationship.  Often they have been single for a long time and would find it difficult having a woman trying to control their time and liberty.  However after convincing these type of guys you can often end up with a good catch.  Because once you break that barrier down and convince them, they will often open up big time.  It is just quite an achievement for a woman to get that far.

Am I just disillusioning myself. I have never flirted with him, mainly because i didnt want him to think I flirted with everyone, but I feel now that I should as we know one another better, and want to move it up a gear.

Yes, you should definitely flirt with him.  To move his mind on from the friend relationship to a potential sexual relationship  (but don't just turn up one day and start endlessly flirting, you have got to gradually build up the flirting).  Flirting is also fun, if you do it right.  The only way he could get into his head that you flirted with everyone, is if you flirted with loads of other blokes in the pub.

Could this make any difference. And one other thing, is it possible for a guy to fancy you as he knows you better over the months or is it a case of if he doesnt fancy you at first he never will.

It is definitely possible for a guy to fancy you or even fancy you more as your friendship grows.  Sometimes a man can see a woman as just a friend for a long time and then all of a sudden she will do something to really turn him on.  It could be that she just does something nice for him or says something nice to him, and blokes are not used to women doing nice things for them (But don't overdo it and do too many nice things for him). 

Or it could be that you accidently touch him one day or he accidently touches you one day (and you don't move quickly out of the way and say sorry, flinch or do anything negative).  Then he will kind of think, I want to touch her again, how far can I take the touching thing with her, before she gets uncomfortable.

I am a bit confused but hoped you might put me right!

Although I answered all your questions above.  I really can not decisively tell you whether he fancies you or not.