Rising oil prices drive cost of petrol towards £1 a litre

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The Independent Online

Petrol prices have reached record levels and are soaring fast towards the £1 per litre milestone.

The rising cost of oil means the average price of a litre of unleaded is now 96.13p, the AA Motoring Trust said, beating the previous record of 96.06p set on 14 September last year.

Diesel crept up from Wednesday's all-time high of 98.71p to a staggering 98.81p, prompting fears of a miserable summer at the petrol pumps as growing international tensions cause further rises.

A combination of strong demand from China, fears over instability in the Middle East due to Iran's bullish nuclear programme, and worries about disruption to supplies from volatile Nigeria have kept crude oil prices buoyant in recent months.

The price of American light, sweet crude oil, a benchmark for global markets, hit a record peak of over $75 a barrel last week. Brent crude, the European benchmark, reached $74.

The £1 litre of diesel already exists on some motorway service station forecourts. The AA warned that high-street shops, entertainment and leisure businesses and tourism would be the first to suffer "as more and more families begin to cut back on other parts of their monthly budgets," according to Ruth Bridger, the trust's petrol price analyst.

The new prices mean the average family with two cars is spending an extra £17.74 on petrol a month since the start of 2006. British motorists are spending £69.2 million on petrol every day, compared to £63.6m at the beginning of the year.

Britain's biggest oil company, BP, warned on Tuesday that drivers needed to accept the idea of the £1 litre of petrol. BP made a £3bn profit in the first three months of this year, at a rate of £33m per day, £23,000 a minute or £382 each second.

Iran dug deeper trenches in its battle with the UN last night, saying it would not comply with any Security Council resolution aimed at halting its nuclear enrichment program because its activities were legal and peaceful. Washington has turned up the temperature on Tehran in recent weeks and the director general of the International Atomic Energy Agency, Mohamed ElBaradei, will report today that Iran has refused to suspend uranium enrichment.

In Britain, Ms Bridger said that the record prices resulting from such uncertainty were hardly "the end of the world" for British motorists, but did mean that some would have to deploy "a lighter foot on the accelerator" to get more miles out of their tank. "If they continue into the summer, then motorists and businesses will suffer."