Marcus Evans Group | Worldwide Headquarters | American Offices | Latin America | European Offices | African / Asian Offices

Diesel prices predicted to reach 150p as petrol hits new record

The RMI group of 6,000 independent fuel retailers warned that another 4.5p rise was on the way, pushing up UK inflation levels and potentially causing more damage to a shaky economy

Leaders of the petrol industry on Friday predicted diesel prices would reach 150p a litre by Easter, the same day that petrol hit a record high of 137.44p, piling more political pressure on the government to cut taxes at the pump.

The RMI group of 6,000 independent fuel retailers warned that another 4.5p rise was on the way, pushing up UK inflation levels and potentially causing more damage to a shaky economy.

The volatile situation surrounding supplies, highlighted by a recent shutdown at the Coryton refinery in Essex, will increase next week when tanker drivers vote on a potential strike.

Brian Madderson, who leads the RMI petrol organisation representing 6,000 retailers, said UK petrol stocks were much lower than in the past because so many forecourts had already been forced to close.

“The weakening of the pound against the dollar, the stand-off with Iran, the financial trouble at refineries such as Coryton are all causing major problems. And on top of that we are facing a strike threat from the Unite union for which you can only say ‘please don’t destroy the country’.”

Madderson said the price of petrol could reach 142p and diesel 150p in the coming four weeks while the AA motoring group said the average price of unleaded fuel had hit 137.44p, a record.

“We are almost looking at week-on-week (petrol) increases at the moment – in the last week unleaded has gone up by 1.25p a litre,” said Edmund King, president of the AA.

“The prospects don’t look great – if the pound is very weak against the dollar you can put a lot of the rise down to that, but that’s not the case at the moment.”

It is now estimated to cost drivers more than £68 to fill up a typical 50 litre tank – £3.45 more than it cost a year ago and £12.30 more than in 2010. Big gas guzzlers such as Range Rovers could cost up to £100 a tank.

King said rising prices would cause problems in the wider UK economy, citing research among AA members which suggested 75% were either cutting back on journeys or reducing spending elsewhere, or both.

The AA and RMI are calling on chancellor George Osborne to abandon the 3p fuel duty rise planned for August, and to remove annual inflation-linked rises in duty.

Cathy Jamieson MP, Labour’s shadow economic secretary to the Treasury said the country needed to see urgent action from George Osborne in the Budget later this month to ease the squeeze and boost growth.

But responding to calls for a cut in fuel duty, Friends of the Earth’s policy and campaigns director Craig Bennett, said motorists were “paying the price for the failure of successive governments to reduce our cars’ dependency on increasingly expensive overseas oil”.

He added: “Fuel duty cuts are not the solution – with oil price hikes set to continue we need a fresh approach to give us a transport system we can all afford.

“Ministers must help fast-track the production of electric vehicles and super-efficient cars that burn less fuel, and provide decent alternatives to driving, such as better public transport and safer cycling.”

Oil highs

Tensions in the Middle East and signs of an improving US economy have driven oil prices to post-recession highs in recent weeks.

Brent crude, which is used as a benchmark for petrol prices in Europe, has been as high 8 a barrel – its highest level since before the world’s plunge into recession brought the price crashing down in 2008.

Oil prices have surged from a month ago because of fears that escalating tensions over Iran’s nuclear programme could trigger a disruption in global crude supplies.

The US and Europe are imposing sanctions on Iran, which has threatened to cut supplies to some countries and halt oil tankers passing through the Persian Gulf’s Strait of Hormuz.

Meanwhile alleged fears over personal safety and growing instability in the fuel industry are pushing oil tanker drivers closer to national strike action, warned Britain’s largest union, Unite.

Voting will begin next week in a strike ballot of over 2,000 drivers who work for seven major fuel distribution firms. The ballot will involve around 90% of drivers supplying petrol to UK forecourts controlled by companies such as Tesco, BP and Shell, as well as airports.

A research note from economists at Scotiabank earlier this week warned higher energy prices could increase inflation and hit public spending programmes. Alan Clarke, a director at Scotiabank, warned: “Public anger at the rising cost of fuel could provoke blockades and strikes. Panic buying and queues at petrol stations are not good for sentiment and overall business activity.” © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds