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Drivers warned on further petrol price risesSource: The TimesPetrol prices are expected to reach more than £1.12 per litre next month as service stations feel the effects of the latest surge in global crude prices. Amid fears of widespread fuel shortages before a planned strike at Grangemouth, Scotland's largest oil refinery, the AA said that the cost of filling a 50-litre petrol tank stood yesterday at £54.44, up £7.82 on a year ago. There is a six-week time lag between global crude prices, which touched historic highs of nearly $120 per barrel this week, and pump prices. The average price for a litre of petrol was 108.89p yesterday but Andrew Horstead, of the energy con-sultancy Utilyx, predicts that prices will rise by about 3 per cent to an average £1.12 per litre during May. In six weeks' time it will cost £140.40 to travel 1,000 miles in a Ford Mondeo, a rise of £12.76; it will cost £210.60 to travel 1,000 miles in a Nissan X-Trail Trek, a rise of £19.13. Diesel, which stood at £1.19p yesterday, could rise to £1.23p. Global crude prices slipped slightly yesterday to just below their record highs. They had risen sharply on Tuesday after an attack on pipelines in Nigeria. Global energy supplies are under intense pressure, with Opec, the oil cartel, refusing to raise output. Records in New York and London have been broken almost daily over the past week amid concerns about a long-term supply crunch. Crucial talks aimed at averting a 48-hour strike early next week at the Grangemouth refinery collapsed last night. Industry observers said that the plant's “point of no return” could be reached in the next 24 hours, so were the strike to be called off, there would still be a significant impact on production and the Scottish economy. This week Saudi officials raised questions about their country's ability to increase long-term production as much as previously expected. A few years ago Saudi Arabia said it would be able to lift production to 15 million barrels a day if necessary and to sustain that for decades. But officials, including Ali Naimi, the Oil Minister, now appear to be retreating, saying they are aiming for 12.5 million barrels. Mr Horstead said the market was being driven higher by continued strong demand from developing countries such as China and India, as well as from the big Western economies, in spite of the economic slowdown. Speculation on further oil price rises by hedge funds and other investors has forced prices higher. British industry and opposition politicians stepped up their calls yesterday for government action to help businesses. The Scottish National Party will table an amendment to the Finance Bill on Monday calling for fuel duty to be cut in proportion to the price rises. The Road Haulage Association says that the industry desperately needs stability and a check on costs. Jack Semple, head of policy, said: “Fuel is accounting for 40 per cent of companies' operating costs and fundamentally sound businesses face going bust.” At present, fuel duty makes up more than two thirds of the total cost of petrol, and business and private motorists pay the same. The only concession for business is that it can claim back the 17.5 per cent VAT charge. But repayment can take up to four months. Hauliers want a more favourable rate for business, condemning the blanket treatment as a “tax on operations”. Geoff Dossetter, of the Freight Transport Association, said: “We want business users of fuel to be taxed differently. At the moment, road transport companies are paying high levels of tax just to operate. You don't pay high taxes just to turn on a computer.” Britain charges about 120p per litre of diesel, compared with the European average of about half that. An additional 2p is due to be imposed in October. Most business groups want this plan to be scrapped. The soaring costs are being passed on to business customers by large hauliers, but small independent businesses have less clout to do so. David Frost, of the British Chambers of Commerce, said: “Every day the price of oil hits a record high, increasing costs for any business dependent on vehicles. The Government must recognise this and at the very least announce it will not be going ahead with the 2p fuel duty rise in October. “Just repealing that, however, is unlikely to be enough to ease the damage being done to the competi-tiveness of UK firms. If the price continues to soar then the Government should look at reducing fuel taxes.” A rise in car tax announced in the Budget as a way of cutting carbon emissions will do little to reduce environmental damage, according to figures obtained by the Conservative Party. While the changes to vehicle excise duty will double the revenue collected from motorists to £4 billion, the figures show that CO2 emissions from motoring are expected to drop by less than 1 per cent by 2010.
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