Pump price warning for motorists as oil cost soars

MOTORISTS could soon be paying near-record prices for fuel because of the soaring cost of oil, experts have warned.

The average price at the pump in the UK is now £1.29 per litre for unleaded petrol and £1.32 per litre for diesel.

It means that filling up a 50-litre tank in a typical family car now costs £65 for unleaded and £66 for diesel, compared to £61 and £62 respectively in January.

But there are warnings petrol could top £1.40 per litre by the year’s end – a price not seen for six years.

If fuel prices continue to rise, the cost of supermarket food and public transport could also increase.

A report by analysts at Oxford Economics shows that the surge in petrol prices is a result of higher oil costs, which jumped from $50 a barrel last June to $77.10 at the end of last week, a rise of more than 50 per cent.

Alex Kemp, Professor of Petroleum Economics at the University of Aberdeen, said: ‘The obvious effect for people will be when they go into a service station to find the cost of their petrol has been driven up quite significantly. There will also be an effect on the price of other goods and services.

‘And on the topic of whether or not the prices are going to continue to rise or not, that is an open question.’

Although fuel prices north of the Border are slightly lower than the UK average, these prices are now at a four-year high – with the equivalent prices not being seen since late in 2014.

Despite this, higher oil prices are good for Scotland’s economy, encouraging investment in North Sea oil, according to experts. Professor Kemp added: ‘Over the last few years the North Sea oil industry has suffered. If investors think this oil price will remain and that it’s not just a flash in the pan, that could be a good thing for the industry.

‘But despite confidence by some people that the price of oil would remain high during the last peak in 2012, it did come down.’

The rise in oil prices is partly a result of global factors including sanctions placed by US President Donald Trump on suppliers in Iran, as well as several other economic factors.

However, it is not all bad news for Scots families because, according to the report, the cost of air travel is set to remain the same – at least for the next six months.

Gizem Kara, senior Eurozone economist at BNP Paribas, said: ‘The oil price now doesn’t affect ticket prices now because airlines are hedged for six to nine months, but you will see the impact later.

‘The same applies to transportation costs. It will be added on to the final price, even food prices might get higher.’

Prices at the pump have been rising steadily since hitting a 12cent year low in January 2016, caused by a massive oversupply.

The damning prediction of petrol price rises comes only weeks after a May Day bank holiday price hike which saw the average petrol price in the UK climb to £1.24 a litre, while diesel hit an average of £1.27 per litre.

A poll at the time by drivers’ group the AA found that 15 per of motorists, most of whom lived in rural areas, admitted driving less and 9 per cent said they had cut back on family budgets and other spending.

An AA spokesman said: ‘Drivers should be worried because prices at the pumps are much higher than they used to be.

‘Our research shows that a third of Scots are dipping into other parts of their finances to compensate for the rising price when they go to fill their cars up, because that trip to and from work is essential and that includes food, clothes and other shopping.’

He added: ‘We believe that in real terms the price of fuel should be going down, but it isn’t. However, the industry releasing over-inflated price predictions like this goes a long way to keeping them artificially high for the profit of the big companies at the cost of motorists.’

‘Food prices might get higher’ ‘Scots are dipping into their finances’