Oil prices: Warning of 20p a litre rise for petrol

Oil prices: Warning of 20p a litre rise for petrol

Motorists are facing further pain after a warning yesterday that the latest surge in crude oil prices to record highs could add another 20p to a litre at the pumps within weeks.

The forecast, from the Institute of Advanced Motorists (IAM), came as new figures showed car sales falling in the face of high fuel prices and collapsing consumer confidence.

Fuel prices set yet another record yesterday at the pumps, rising to an average of 119p for unleaded petrol and 132.4p for diesel, according to the IAM Motoring Trust, which monitors pump prices daily. Further rises are also on their way.

IAM's technical director, Tim Shallcross, said the surge in oil prices in recent days to fresh records above $146 a barrel had yet to feed through to the pumps. "If crude prices stay around their current level, we could well see another 20p on a litre over the coming month," he said.

Crude prices retreated by around a dollar a barrel yesterday but were still just under $145 a barrel, with many predicting they will soon push above $150.

Shallcross said that petrol retailers had not passed on the full cost of the 100% rise in crude prices over the 12 months to the end of June. If they had, he said, unleaded would already be at 140p a litre on average and diesel 150p.

The Society of Motor Manufacturers and Traders (SMMT) said that car sales totalled 209,000 last month, a fall of 6.1% from May - the steepest decline so far this year. Private.....continued below

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(non-fleet) sales suffered much worse, tumbling by 12%.

"We are now seeing concerns about rising fuel bills and household costs dampening consumer confidence, leading to slower demand for new cars," said Paul Everitt, the SMMT chief executive.

He said the sharp fall meant that sales which had been doing well in the spring, had moved back into line with the SMMT's forecast that sales would continue to slow and total around 2.35m cars this year.

The rising price of fuel had encouraged people to change to smaller cars.

"Cost pressures, environmental concerns and technological advances have ensured consumers have taken the choice of buying more efficient vehicles, and record numbers of cars are now in the lowest CO2 vehicle excise duty bands. The share of cars in the A band has increased more than tenfold in the past year," said Everitt.

Band A cars, however, still account for only 0.13% of the new car market because there are so few cars available that emit less than 100g of CO2 per kilometre. The SMMT figures showed big increases in band B and C sales, but falls in bands D to G, which include cars with higher emissions.

The SMMT figures showed diesel cars continued to grow in popularity in spite of the widening divergence in price between petrol and diesel. It said this was because its greater economy and lower CO2 emissions and tax bands outweighed the pump price disadvantage. Diesel cars accounted for almost 43% of the market last month.

Despite environmental concerns, sales of alternatively fuelled vehicles such as the G-Wizz electric car decreased for the second successive month - down 6.7% to 1,447 vehicles.

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