£7 gallon predicted on day of fuel price protests

29/04/08

World oil prices may reach new record highs, sending pump prices spiralling by the autumnPetrol prices could reach £1.50 a litre by the autumn, industry figures predict. The news comes as lorry drivers plan a protest in central London today over the cost of fuel. Diesel prices have risen by over 16p per litre since the start of the year to reach a record average of almost £1.20, or well over £5 per gallon.

Up to 500 lorries will travel in convoys along major routes into London before meeting up in Park Lane. One, it is said, will carry a coffin symbolising the demise of the haulage industry. The protesters will then mass outside the Houses of Parliament.

While the two-day strike at the Grangemouth refinery that ended yesterday won’t have helped, the driving force behind the rises is the increase in world oil prices, currently touching $120 per barrel. It will take six weeks at least for these to feed through to the pumps, so their full effect won’t be felt until June at the earliest.

And further rises are likely. OPEC, the organisation which helps regulate world oil prices, says the market is ‘volatile’. Chakib Khelil, OPEC president and Algeria’s energy minister, has admitted that prices could rise soon to $200 a barrel. At the pumps, this would price unleaded at £1.50 per litre – or £6.80 per gallon – and diesel at £1.60, taking it to over £7 per gallon.

This comes as Shell and BP announce record profits of £6bn for the first three months of 2008. The companies are quick to point out that these figures are due chiefly to fluctuation in world oil prices rather than profits drawn from fuel refining or from petrol forecourts, where they say margins are extremely tight.