Crude oil prices surge past $134 a barrel

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The effects of the surging price of oil were being felt around the globe yesterday, as lorry drivers in the UK promised a protest against the Government, and the largest American airline said passengers will have to pay more for fewer flights if companies are to avoid bankruptcy.

And amid all the concern, oil prices continued their inexorable rise, even accelerating upwards in after-hours trading in New York last night, with the cost of a barrel of crude up more than $5 to go past the $134 mark for the first time.

Earlier in the day, the US energy department had revealed that stockpiles of oil fell last week, reversing a four-week trend and prom-pting concerns of supply shortages to come.

And analysts said the much bigger picture had still not changed: global production growth is failing to keep up in the face of huge demand from emerging economies in Asia and the Middle East. The price of a barrel of oil in New York was $134.42 in after-hours trading last night. In London, Brent crude rose $4.86 to $132.70.

One oil analyst at a major investment bank said: "The supply side tends to keep on disappointing. If there was a fall in demand the price would go down but the emerging market demand is incredibly high."

This has been compounded in China by the earthquake, which knocked out several plants run by coal and hydro power. They have had to bring in extra oil to generate replacement power.

In the UK, the price of diesel and petrol has soared. The UK Automobile Association said the average price of diesel jumped almost 6 per cent between mid-April and mid-May. This equated to a 6.76p rise to 124.17p per litre. At the same time, petrol has risen 4.49p to 112.55p.

The lorry group TransAction 2007 has organised a protest on behalf of members of its industry, who will drive to London – the most expensive place to buy petrol according to the AA – and demand a rebate from the Government. They fear hauliers will be driven out of business at the cost of thousands of jobs if no action is taken.

On the other side of the Atlantic, airlines were feeling the pinch particularly hard yesterday. American Airlines, the country's larg-est, said it would retire 75 aircraft, cut flights by 12 per cent and start laying off staff. It also said it would start charging for checked baggage, the latest airline to raise prices for passengers.