8 June 2004

Motorists face the horror of the £4 gallon – or 89p litre– this autumn, when crude oil price rises and government tax hikes could hit drivers’ wallets. Petrol has jumped 8.5p per litre over the past 18 months, and last week suddenly rose by another 2p. The Government will add a further 2p per litre in September, a tax hike flagged up in the spring Budget but delayed until autumn.

Last week’s price rises won't arrive at the pumps for a another three to four weeks, so more rises are inevitable.

For the average car with a 60-litre tank, a fill-up with unleaded this week will cost £49. Only six months ago, it cost £44. At £4 a gallon, the same car would cost £53 to fill. Fuel protests, like the one led by outraged hauliers and farmers in September 2000, are now threatened. ‘Since the last protest, people have less of an attitude of sitting back and doing nothing. They feel that direct action can get results,’ said an AA official.

Fuel prices have risen steadily this year, largely because of unexpected demand from China and India. But terrorist action in Saudi Arabia prompted further leaps as the US replenished buffer stocks in anticipation of yet more trouble.

UK petrol and diesel prices are already the most expensive in Europe because of our high taxes. Only 20p of every litre covers the cost of extracting, refining and distributing fuel. Petrol retailers make about 1.5p profit, leaving 60p in the hands of the Government.

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