Petrol up for seventh time this year

MOTORISTS ARE being warned to brace themselves for the seventh petrol price rise this year, with forecourt prices expected to leap by about 5p a litre (20p a gallon) this week.

Last Friday the average price per litre increased by 2p to 73p and motoring organisations and the haulage industry have been told to expect a similar increase this weekend. That means the average motorist would be paying 10p more a litre, or about 45p a gallon, since last December. An AA spokesman said we have the most highly taxed fuel in the EU.

"Eighty-five per cent of the price of every gallon bought on the forecourt already goes in tax to the Treasury," he said.

An RAC spokesman said the Government should cut tax on petrol to help those in rural areas forced to use cars. "Through the world prices have been reduced at base cost but the motorist has been paying more at the pump," he added. British drivers pay almost four times as much as drivers in the United States, where fuel is 86p a gallon, cheaper than bottled water.

Among the worst-hit will be the haulage industry which yesterday warned the escalating fuel costs were putting jobs at risk and further damaging the ability of British firms to compete in Europe. Jeff Dossiter, of the Freight Transport Association, said: "The fuel formula is hugely punitive and is not achieving what it is claimed it is for, that is, less traffic on the roads.

"Every time you drive a British lorry off the road because of higher costs his lorry is replaced with a European driver who can buy a cheap tank on the Continent, deliver goods here and take exports with him for less."

The increases have been blamed on a deal struck in March by 15 of the world's biggest oil producing nations to cut production in an attempt to rescue crude oil prices, which had slumped to less than $10 a barrel.

Combined with declining crude oil stocks in the US and dwindling global reserves, mainly due to increased demand in resurgent Far Eastern economies, the price of a barrel of crude oil has soared in the last month to just under $21. A recent report by the International Energy Agency forecast crude prices rising to as high as $25 per barrel. Oil industry analysts have warned of further rises at the pump.

A spokesman for BP Amoco said oil prices had doubled, but pump prices had risen by only 11 per cent.

"The typical price is 73p per litre and at the start of the year it was 63.7p," he said. "Take away the budget rise of 4.4p per litre and you can see the actual price increase."

The giant Allied Bakeries yesterday raised the cost of a loaf by 4p, claiming prices were unrealistically low, but Tesco said it would continue to offer a sliced loaf for 17p.

Allied's commercial director, Eric Place, said: "The average price of an 800g loaf here is 46p compared to pounds 1.40 in Europe and 93p in the US. Since January 1994, the price of bread has fallen by 1 per cent."

Leading article, Review, page 3