The impact of high petrol prices

by BBC business correspondent Greg Wood

Petrol prices in the UK have hit an all-time high, getting close to 90 pence per litre.

At some garages, mainly in outlying rural areas, consumers now have to pay the equivalent of four pounds a gallon.

UK petrol prices

1995: 53.5 pence

1997: 61.7p

1999: 70.2p

Now: 84.2p

average pump price, unleaded fuel

At Haverfordwest in the far west of Wales, Simon Harvatt runs a family-owned garage.

The county of Pembrokeshire is an area with two main industries - farming and tourism - both of which are in decline.

Fleecing the consumer

Public transport is virtually non-existent, so people depend on their cars, tractors and lorries.

The consumer is being fleeced

Simon Harvatt

Simon's customers are now paying 86.9 pence a litre for unleaded petrol.

They're inclined to blame the high level of tax - more than 60 pence a litre goes straight into the government's coffers.

"The consumer is being fleeced," Simon agrees.

Ironically for an area in the shadow of the massive oil refineries at Milford Haven, Pembrokeshire has some of the most expensive petrol in the UK.

Simon's garage buys its petrol from the big oil companies and has little choice but to pass on to its customers price rises triggered by the recent jump in the cost of crude oil and other petroleum products.

In January 1999, one barrel of crude oil cost $10. Now it sells for more than $30.

Driving up the costs

Just outside Haverfordwest, brothers Emrys and John Davies run an organic meat processing business, Welsh Hook Meat Centre.

Everything coming in or out of their premises does so by road and many of their customers are based in the M4 corridor east of Swindon, a round trip of well over 200 miles.

The factory is brand new, purpose-built just two years ago.

But since then John Davies reckons that his fuel costs have risen by 10%.

Tax strategies

Petrol prices minus tax

1995: 14 pence

1997: 13.9p

1999: 13.1

Now: 22.8p

Pump price excluding duty/VAT

He's had to put up his own prices and high transport costs are constraining the number of workers he can take on in an area of high unemployment.

These considerations are far from the minds of Opec ministers meeting in Vienna.

They are likely to agree an increase in oil production, but crude oil prices are not expected to fall by much from their current levels, at least in the short term.

Unless the government changes its tax strategy, the people and businesses of Pembrokeshire will have to learn to live with high fuel prices.