Petrol prices to rise 7c as oil prices soar

PETROL prices are set to rise by 7c per litre within weeks after world oil prices smashed through the $50 barrier yesterday.

The worst fears of motorists and Government policymakers were realised as prices continued the skyward journey that began earlier this year, when a barrel of oil cost less than $30.

Fresh worries over future supplies, this time driven by a worsening security situation in Nigeria, sent oil prices on the New York Mercantile Exchange (Nymex) to $50.47. Benchmark Brent crude prices in London teetered near record highs at $46.72 per barrel.

The AA warned motorists to batten down the hatches in advance of higher prices feeding through to petrol forecourts. AA spokesman Conor Faughnan said motorists could expect to pay 7c more per litre within four weeks, if oil prices remained at their current level. This would add over €150 to the typical driver’s annual fuel bill.

Mr Faughnan said motorists should try to shelter themselves from the worst effects of higher prices by shopping around and refusing to buy petrol from high-price retailers. He also called on motorists to lobby the Government to reduce fuel taxes, which he said accounted for 67c in every euro paid for petrol.

“Motorists should scream blue murder at Charlie McCreevy's successor,” said Mr Faughnan, who also criticised the last year’s 5c per litre increase in fuel excise duties. The AA said this was a mistake at the time and represented a gamble by the finance minister on world oil prices and international exchange rates. The 5c hike should be reversed in this year’s budget or even sooner, Mr Faughnan said.

Rising oil prices are also a major concern at the European Central Bank, which said last week that inflation would not fall below its target of 2% in the current year. ECB president Jean-Claude Trichet said further shocks to the global economy next year, along the lines of this year’s surge in oil prices, would mean next year’s inflation target would also be missed.

But the continued weakness of the dollar has sheltered the eurozone from the worst effects of the oil price spike. While dollar prices have surged 70% so far this year, the strong euro has meant that, in euro terms, prices are just 14% higher than in the immediate aftermath of the September 11, 2001 terrorist attacks.

Yesterday’s price surge came as the market responded to news from Nigeria that anti-government rebels planned to seize control of major oil producing sites and target foreigners working for international oil firms in the country. The rebels accused local arms of major oil companies, including Anglo-Dutch giant Shell and Italy’s Agip, of helping the Nigerian government put down their insurrection.