Industry and Energy

Industry and Energy

Petrol prices hit record high and could increase even more

09 April 2010 00:51 (UTC +04:00)

Baku-APA. Petrol prices have hit an average all-time high of 120p per litre, it emerged today, and there were predictions they could go even higher this summer to as much as 150p â€“ and fuel duty could become an electoral issue, APA reports quoting Guardian.co.uk web-page.
The new high, which eclipses the previous peak of 119.7p in July 2008, comes just days after a fuel duty rise of 1p a litre.
RAC motoring strategist Adrian Tink said: "This is a dark day for motorists. Petrol prices have been rising steadily over the past year and have reached the inevitable record high. This is only the average. In some areas, motorists will be paying close to Â£6 a gallon (131.9p a litre)."
The government â€“ which has clashed with the fuel lobby over the years, most notably in 2000’s blockades by lorry drivers â€“ will be closely monitoring reaction to the higher average prices.
Tink believes that petrol prices â€“ particularly fuel duty which makes up about half the cost â€“ could now become a major issue in the general election. Tink said: "This is a key issue for Britain’s 32 million motorists who are watching their bank accounts drained every time they fill up."
The increase has been caused by a combination of factors: rises in the wholesale price of fuel have produced steady rises since the beginning of the year with Brent crude costing an 18-month high of about $86 (Â£56) a barrel, while tax rises since December 2008 have also added about 10p to the cost of a litre of fuel.
But the biggest factor is the weak pound, according to Brendan McLoughlin, founder of Petrolprices.com. He says the impact of the exchange rate has been the single largest cause of recent rising pump prices and, with oil prices still increasing, could result in prices as high as 150p a litre this summer.
Some garages in the UK are already demanding well over 120p a litre, while others are still charging around the 117p mark, according to McLoughlin. The most expensive garages, which include an M1 service station at Milton Keynes, are charging 130.9p a litre.
Some variation will be caused by the time the garage last bought a tanker of petrol and set its prices: the longer ago it made the purchase, the cheaper the fuel is likely to be. That could explain why prices varied by 9p within one postcode area of South London today.
But Paul Watters, head of roads policy at the AA, said variation could also be attributed to the "Asda factor".
Watters said:"If you live near a supermarket that sells petrol, you will benefit from lower prices because they can negotiate better deals with the suppliers because they are selling huge amounts of fuel, and other nearby garages will have to keep their prices as close as possible to compete."
The supermarkets operate just 1,200 of the 10,000 petrol stations in the UK, but they account for an average of 12m litres of the 14.5m litres of petrol sold each year.
The Labour and Conservative parties have provided scant information about their policy on fuel duty so far. However the RAC said it expected the Labour party to continue with its plans to increase fuel duty in October and January by 1p and 0.76p respectively.
Only the Liberal Democrats have pledged to reduce fuel duty, primarily in recognition of the disproportionate costs of living in the countryside where fuel costs more and there tends to be less public transport.
Recent research for the AA found that motorists have started changing their driving habits to reduce the amount of fuel they used.
Edmund King, the president of the AA, said that drivers were refusing to pay the higher prices demanded by some garages: "Over the weekend, some retailers who put prices up 2p a litre in line with the increase in duty and other costs, brought them back down. Such is the knife-edge between what drivers can and cannot afford to spend on fuel."