Saturday, 24 May 2008

Fuel prices to remain high for 8 years, UK motorists warned

With crude prices breaking 135 dollars per barrel (dpb) Thursday, accountants Grant Thornton suggested that petrol costs in the UK could reach Pnds 1.21 (Dlrs 2.40) per liter, if oil hits 140 dpb.

Prices would soar to Pns 1.46 per liter, if oil breaks 200 dpb, it said.

The average cost of a unleaded petrol in Britain is now over Pnds 1.13 per liter, with motorists suffering from almost daily rises over the past month.

The warning comes as investment bankers, Goldman Sachs, have been advising clients, including airlines and haulage groups, to buy oil supplies now for delivery in eight years, to insulate themselves from further increases.

The bank, which has previously forecast the possibility of oil reaching 200 dpb next year, has said that there could be a major shortage of oil over the next 10 years.

The escalating prices has prompted a renewal of fuel protesters, who are due to converge on London next week to demand that the government cuts the high fuel taxes, which are due to go up again in October by a further 2 pence per liter.

Britain's Automobile Association (AA) is backing the demand to shelve October's increase, while blaming speculators for the unprecedented run on oil prices.

"For the consumer it is very worrying that you have got financiers taking a punt on the price of oil which then becomes a self- fulfilling prophecy," said AA president Edmund King.

"This is now affecting the daily lives of millions of people and ministers should be looking at a range of options to deal with the rising cost of petrol," King said.

There is already anecdotal evidence that motorists are "downsizing" their vehicles because fuel costs for family cars are now so high, facing bills of more than Pnds 70 when filling up popular saloons, twice the price of three years ago.

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