UK petrol prices hit new record
BBC News | August 9, 2005
The average price of unleaded petrol in the UK has risen above 90p a litre for the first time.
Catalist, which monitors prices, says the average for unleaded is 90.2p a litre, and just under 94p for diesel.
The increase has been attributed to the soaring cost of oil, which hit a record high amid security fears in Saudi Arabia, the world's largest producer.
Pump prices are unlikely to fall and drivers are paying £7.5m more on fuel daily than in January, the AA has said.
But Vince Cable, Liberal Democrat Treasury spokesman, told the BBC that increased supplies would force the price of fuel down again.
Up and down?
"I think it's quite likely that prices will continue to rise in the short and medium term - by that I mean weeks and months," said Mr Cable.
"But there is a sort of basic law here that what goes up must come down. High prices lead to low prices and I think too many people are assuming that this period of very high prices is going to continue indefinitely, and it won't."
Ruth Bridger, petrol price analyst at the AA Motoring Trust, told BBC Radio 4's Today programme she believed the price would continue to rise "a bit more over the next few days" because of the rising price of crude oil.
The trust says the prices mean a typical two-car-owning family is paying £23.32 more a month for their petrol compared with the start of the year.
But Ms Bridger said: "There seems to be no sign of a slowdown in people using their cars for business and pleasure."
In early Asian trade on Tuesday the price of a barrel of US light sweet crude rose to $64.27. In the US crude oil futures were at $63.67 in electronic pre-opening trading on the New York Mercantile Exchange,
Ms Bridger said some garages in remoter areas, such as some Scottish islands, were already having to charge £1 a litre to take account of their higher delivery costs.
"However, hopefully £1 a litre as the general price is a long way away," she added.
The BBC's Business Editor Jeff Randall said higher petrol costs would be felt throughout industry, but added that it did not feel like a return to the 1970s.
There was no sense that the world was heading into recession, he said.
The planet's biggest petrol consumers, the US and China, were powering ahead and there was little chance of them being thrust backwards by the price rise, he added.
The cost of oil rose on news that the US Embassy in Saudi Arabia would be closed for two days due to reported security threats.
Saudi Arabia is the biggest global supplier of oil and the threats raised concerns about supplies.
The planned Saudi Embassy closure comes less than a week after the death of King Fahd of Saudi Arabia alarmed the markets.
However, a spokesman for the Saudi interior ministry was reported as saying his government had no information about a possibly security threat.
As oil prices approach $65 per barrel, the rise in pump prices appears to be worldwide.
In the United States, a gallon of gas now costs a record $2.37, the highest ever recorded.
The higher UK price largely reflects the higher rate of government petrol duty.