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Petrol 'to hit £5 a gallon' as motorists face record fuel bills at the pumps this Christmas



By Daily Mail Reporter

Last updated at 1:38 PM on 16th November 2009





Motorists face fuel bills rising to record levels as they fill up their cars in the run up to Christmas, a report warns.

The RAC said today petrol prices are expected to reach 110p per litre by the middle of next month – the equivalent of £5 a gallon.

The latest price rises - blamed on worldwide oil costs and the falling value of the pound - will come into force just as millions of families plan Christmas visits by car to family and friends.

The price hike means an increase of more than 26 per cent on last year when unleaded fuel cost 87p a litre.


article-0-04CD6837000005DC-294_468x365.jpg Eye on the bill: Oil costs and the value of the pound have pushed up pump prices


It means that filling up an average family car will cost £60.50 this December, £12.15 more than a year ago.






But the UK’s 30million motorists need to brace themselves for further pump misery in the New Year as a planned 2.5 per cent VAT increase on January 1 will add a further £1.50 to the cost of a tank.


‘With the £5 a gallon mark likely to be hit before Christmas, many families are likely to think twice about visiting family and friends'


RAC spokesman John Franklin said: ‘The festive season is traditionally a very expensive time and this has been made worse by petrol prices rising by around 26 per cent from last year.

‘With the £5 a gallon mark likely to be hit before Christmas, many families are likely to think twice about visiting family and friends.’

The price warning comes after oil giant BP revealed bumper quarterly profits of more than £3billion - a 60 per cent rise on the £1.9billion profits it made between April and June.

The question of oil speculators driving up the cost of motoring was examined this summer ago by the UK's financial watchdog which organised a summit.


Enlarge article-1228163-073C7C9F000005DC-569_468x324.jpg This graphic shows crude oil production by the Organisation of the Petroleum Exporting Countries


The Financial Services Authority said the meeting involved oil producers, traders, banks and funds.

According to the FSA, the meeting was to discuss 'market transparency and efficiency'.

The oil industry rule of thumb says that every $2 rise in the price of oil puts 1p on to the price of a litre of petrol at the pumps - adding 50p to every fill up.

In mid-August the AA said the price of unleaded had soared from 90/6p in March to 102.67p - much of it on the back of speculators.

Oil prices hit an all-time high of almost $150 per barrel in July 2008 before plunging to below $40 in December and then bouncing sharply back up.

Motoring groups have accused the oil companies of being quick to hike prices when the cost of crude oil rises and slow to lower them when it falls.

Average petrol prices have already jumped from 105.1p a litre to 108.5p a litre in just a month.

The last time petrol was so high the cost of crude oil was around $100 a barrel.

Yet the price of crude has remained between $75 and $80 a barrel over the last month.

The RAC added: ‘It’s about time oil companies became more transparent with their pricing so that motorists can clearly understand why these price rises happen - otherwise they will continue feel like an easy target that keeps the profits flowing in.'

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