For car owners, the surge in oil prices translates to the petrol forecourt. Motorists now spend an extra £7.5m a day on fuel compared with January. The AA said surging oil prices has sent the cost of a litre of unleaded petrol over the £1 mark in some areas, and warns there is little chance of prices coming down. The average price is now near 90p. Luke Bosdet, a spokesman for the AA Motoring Trust, said: "Everybody hopes that when the price of crude oil comes down, petrol retailers will bring their prices down as quickly."
GAS AND ELECTRICITY BILLS
Powergen says gas bills will increase by 11.9 per cent this month, a 33 per cent rise since January last year. Electricity from Powergen will cost 7.2 per cent more, a rise of 25 per cent since last January. According to Powergen, a simple explanation is that when drilling for oil, gas is a bi-product, often produced by the same companies. So a rise in oil prices is directly proportional to a rise in gas price. The power stations which generate electricity are mainly fuelled by the ever-more-expensive gas and oil.
The rise in oil prices cannot be escaped by fleeing the country - the airlines are also facing astronomical fuel bills, which translate into more expensive flights. On Friday, British Airways warned its annual fuel bill was likely to be £75m more than previously thought and £525m above the level of last year. The low-cost budget airline easyJet has also revealed that its fuel costs are likely to reach £260m, forcing it to make savings elsewhere in its business to protect profits.
As faltering economic growth is sapping consumer spending, the housing market is already moving towards a slump - house prices have risen by the smallest in two years, according to a report from the office of Deputy Prime Minister. The average cost of a home rose by 5 per cent from a year earlier to £182,651. The Bank of England last week dropped interest rates to 4.5 per cent to shore up sagging consumer spending. Inflation, at 2 per cent, is likely to rise because of oil prices