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Last Updated: Tuesday, 1 June, 2004, 21:37 GMT 22:37 UK
Petrol price rises 'inevitable'
Customer at petrol pump
Prices are expected to rise in September due to a tax increase
The Saudi hostage drama is likely to worsen UK petrol price rises already forecast for summer, retailers say.

The warning came as the UK crude oil price rose to the highest level since its 1990 peak, following last weekend's terror attack that left 22 people dead.

To avoid an increase at the pumps the government would have to drop plans for a 2p rise on fuel due in September, the Petrol Retailers Association said.

But Downing Street said there were no plans to intervene in petrol pricing.

Petrol breached 80p per litre in the UK last month due to global oil demand and tension in the Middle East following the Iraq war.

It topped the 80p barrier in May for the first time in four years, but is below the 85.32p recorded in June 2000 which sparked widespread fuel protests.

The present Saudi situation is merely adding to what was already going to be a difficult year
Ray Holloway
Petrol Retailers Association

Petrol Retailers Association director Ray Holloway, speaking early on Tuesday before the price of a barrel of crude oil increased by 6.83% to 21, said: "Prices were expected to go up even before the latest worries about Saudi Arabia. The die was cast a long time ago.

"Price rises now are the result of the rise in crude prices in May and it's clear that this summer is going to be a very difficult one.

"The present Saudi situation is merely adding to what was already going to be a difficult year."

Chancellor Gordon Brown announced in his March Budget the fuel tax increase for September.

Mr Holloway said unless this was reversed, petrol prices will inevitably rise, but added that it was impossible to forecast by how much.

"If the price of crude goes up, prices at the pumps go up.

HIGH OIL PRICES
US oil hit $41.85 a barrel in May
That was a 21-year high
Opec next meets on 3 June
Oil consumers are concerned about the threat of inflation

"But it's very difficult to say what the price could go up to. Certainly, motorists in rural areas will face the highest prices."

The prime minister's official spokesman said Tony Blair would not intervene to halt petrol pump prices.

He said: "The prime minister does not determine the price of petrol.

"It's not for the prime minister to indulge in TV reality shows and judge the price of the oil market."

But Britain would urge the Organisation of Petroleum Exporting Countries (Opec) to increase production to fend off more increases in the price of crude, he said.

BBC business presenter Declan Curry said this week's increase in crude oil prices should not have too much impact on petrol pump prices, as taxes were the main component of petrol pricing.

A survey by insurance company Churchill said up to 70% of motorists would support a repeat of the 2000 fuel blockades.

Over 60% motorists were already taking measures to protect themselves from such a fuel crisis, by stocking up on groceries, filling spare fuel tanks to keep in cars and always ensuring that the car fuel tank was full, the survey said.




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