The Gloom Goes on With Oil at EUR146 a Barrel

OIL prices hit yet another record high yesterday, reaching more than EUR146 a barrel as the Prime Minister warned they could continue climbing.

Gordon Brown said soaring demand from Asia could send prices up even further over the longer term. Prices peaked at EUR146.69 on the London commodity markets before easing back slightly.

Mr Brown told MPs on the Commons Liaison Committee: “If demand exceeds supply and is likely to exceed supply for years to come, people will expect the price to rise.”

The gloomy predictions came as administrators blamed rising fuel prices for the collapse of a haulage firm which could cost 300 jobs.

The latest price spike means the cost of oil has risen by more than 50% since the start of the year, when prices were EUR96.

UK drivers face further pain on the country’s forecourts, with every two-dollar rise adding 1p to petrol prices, according to the AA.

Data from website petrolprices.com showed a litre of unleaded petrol costs an average of 119p in the UK, with diesel prices averaging 132.3p. The fuels are 16% and 23% dearer since the beginning of the year.

Administrators KPMG yesterday blamed rising fuel prices for the collapse of Leeds company Macfarlane Transport. It came a day after hauliers descended on London for another fuel price protest.

Crude’s latest jump came just before a quarter-point rise in interest rates by the European Central Bank (ECB), which is expected to weaken the dollar and tempt more investors into commodities such as oil.

But ECB chiefs held back from signalling more rate rises, limiting the damage to the dollar. Last week, the president of the oil producing cartel Opec, Chakib Khelil, forecast the cost of crude could rise to EUR150 to EUR170 a barrel this summer.

Higher oil prices feeding through to fuel, energy and raw materials costs have been a main driver in the UK’s increasing inflation, currently running at 3.3%.

This could lead to an interest rate rise from the Bank of England as policymakers battle to bring inflation back to its 2% target.

(c) 2008 The Journal – Newcastle-upon-Tyne. Provided by ProQuest Information and Learning. All rights Reserved.