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Last Updated: Tuesday, 23 March, 2004, 19:57 GMT
US petrol prices at all-time high
Filling up a car
Americans are paying more at the pump for their petrol than ever thanks to the remorseless rise in oil prices, a study has found.

The AAA, a US motoring organisation, says prices now average almost $1.74 a gallon (or about 25 pence a litre).

That, the AAA said, was the result of high crude oil soaring to nearly $40 a barrel and tightening stocks in the US.

Adjusted for inflation, the price is the highest since 1985, in the wake of the 1970s oil shocks.

Twice during the 1970s, in 1973 and 1979, oil cartel Opec cut supplies, driving prices sky-high.

From 1974 to 1985, the US price of petrol - in 2002 dollars - never dropped below $1.80, and soared as high as $2.69 in 1981, according to the American Petroleum Institute.

Dollar in your pocket

But the AAA figures are the highest since then - and its spokesman pointed out that consumers do not adjust for inflation in the way they see prices.

"Inflation adjustment is very helpful for economists, but families and businesses pay in current dollars," he said.

Despite strengthening economic growth in the US, most people have seen wages stay flat in real terms and even in dollar terms in recent years.

The runup to the war in Iraq and the price rises since mean the current $1.738-a-gallon rate is up almost 50% higher than the March 2002 price of $1.215.

Crude oil prices are being kept high by a combination of impending Opec supply cuts and buying by the US government to refill its Strategic Petroleum Reserve.

In Europe, petrol prices average about $5 a gallon.

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