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The Times: Britons are facing £1 a litre

Apr 24th, 2006
by admin.

Britons are facing £1 a litre

By Ben Hoyle and Rosemary Bennett

There’s no end in sight to rising prices

AVERAGE petrol prices are expected to pass £1 a litre for the first time as the oil price surge shows no sign of ending.

Gordon Brown led a chorus of concerned voices over the weekend about the economic effects of spiralling oil costs.

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Prices at British petrol stations have been climbing steadily at a rate of about a penny a litre every week since the beginning of this month.

Crude oil reached $75 a barrel in trading on Wall Street last Friday. The most recent figures available, from Thursday last week, showed that forecourt prices were only fractionally below the British record highs set on September 14 last year when about 3,000 service stations ran dry.

There is no sign yet of a resumption of fuel-price protests, but with unleaded petrol averaging 95.25p a litre and diesel at 98.29p and likely to climb, that could change.

Last week filling stations in London sold petrol for more than £1 a litre for the first time and maximum UK prices of £1.04 for unleaded and £1.09 for diesel were recorded.

A spokesman for the AA Motoring Trust said: “I wouldn’t be surprised if we have already reached an all-time high for the average price of petrol across the country during the weekend.”

He added that the average price of petrol at the pump would inevitably pass £1 a litre in the near future.

He said: “The market is extremely volatile and the whole picture could change quickly, although prices tend to come down slower than they go up.”

Ian McCafferty, the chief economic adviser to the CBI, said that the UK economy was now more vulnerable to oil price rises than it was last year or in the autumn of 2000.

“There is less consumer confidence and the economy is more fragile than it was then. I think this has to be one of the two or three things that the Chancellor is most concerned about. It’s a worry for GDP growth, for the strength of the economy and for whether the Treasury can meet its fiscal targets.

“But I don’t think we should be panicking at this stage. The impact so far on the UK has been perhaps less than we might have expected, particularly compared with the oil shocks of the 1970s and 1980s.”

The Chancellor told a gathering in Washington of finance ministers from the G7 leading industrial countries that “high and volatile oil prices” were one of the principal threats to the global economy.

The European Union’s Energy Commissioner, Andris Piebalgs, said yesterday that high oil prices were “destroying economic growth” in Europe.

He told an audience in Doha, Qatar, where representatives of 65 nations, including the Opec states, have been joined for trade talks by the chief executives of Chevron, Exxon Mobil, BP, Royal Dutch Shell and Occidental, that high oil prices were “boosting inflation and slowing consumption” in the EU. Fears over possible American intervention in Iran and continuing instability in oil- producing countries on four continents have combined with rising demand for oil in Asia to drive the price of crude oil to record levels. For consumers around the world the impact is already being felt at the petrol station.

Vince Cable, the Liberal Democrat Treasury spokesman, said: “Volatility derives from the lack of spare capacity in Opec countries so Gordon Brown urging them to produce more is futile. It’s like appealing for more rain. It will be several years before there is more capacity.”

However, he said that the EU economy had been robust in the face of high oil prices. “It is surprising to many of us that the oil price has had so little impact on the EU although clearly it will reduce growth in oil importing economies of Europe and North America.”

 
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