Petrol Price Going to Hit Record High

Petrol prices are set to leap up once again over the next few weeks and hit record highs.  The AA believes that prices are set to hit £1.20 per litre for the first time in UK history.

The wholesale price of fuel has been constantly rising since January, having a knock on effect to forecourt prices.   The AA is urging Chancellor, Alistair Darling to postpone and planned introduction of a 3p rise effective as of 1 April.

According to the motoring organisation said that the average family now spends an extra £52 a month on Petrol than they did at the same point last year.  The average price currently sits at just above £1.15 per litre.

AA president Edmund King told the BBC: "We all know government finances are in dire straits but a 3p rise in fuel duty is not good for the economy and could fuel inflation."

He also added that the wholesale price has risen 17% over the past month, and that the increase has not yet fully been passed onto the pumps, therefore the price may well hit £1.20 before the expected further increase on 1 April.

The major factor in the price rise is the current oil price, however it currently stands far lower than the record high of $147 per barrel in 2008, at just $80 per barrel.  The high in 2008 saw the last time that prices began to approach £1.20 per litre.

With the oil price currently being far lower, many people are confused as to why the price is still remaining so high.

Lindsay Hoyle, Labour MP on the Commons business committee, told the Daily Telegraph: "Crude oil has gone up this year, but nothing like the rise in petrol prices. Motorists are being legally mugged at the forecourt by petrol companies."

He has also added that the current high price in petrol is ‘a complete disgrace.’

Some analysts are also saying that the weakening strength of the sterling against the dollar is to blame, as the oil price is calculated in dollars. They believe this is partly to blame for the current high price of petrol.

Edmund King also added that a lack of refining capacity in Europe has contributed to the constant increase of the wholesale price.

"The oil industry needs to look at refining capacity to keep costs down," he said.

Posted at 02:00PM Mar 16, 2010 by Marc Stenton in The Economy  |  Comments[0]