Petrol prices returned to record highs yesterday, less than two weeks after the Government pledged to alleviate the pain of motorists and cut fuel duty.
Motoring organisations called for a global meeting of energy ministers to address a surge on international oil markets which took the sterling price of crude to its highest ever level.
Chris Huhne, the Energy and Climate Change Secretary, said that market prices had lost sight of the real world. On his first visit to Saudi Arabia, Mr Huhne and the Saudi Oil Minister Ali Ibrahim Al-Naimi urged traders to take a reality check.
“There is no shortage of supply, and yet the price has remained high. International energy markets should understand that the current price of oil does not reflect the realities of supply and demand,” Mr Huhne said.
Brent North Sea crude remained close to $121 a barrel today as traders voiced concerns about military stalemate in Libya and political uncertainty in West Africa.
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Taken alongside a 17 per cent fall in the value of the pound over the past two years, the sterling price of Brent rose to a record £74.60 a barrel.
Refiners and the petrol stations they supply say they cannot afford not to pass the rise on to consumers.
Drivers are cutting back on discretionary travel while small businesses say they are under threat from higher fuel costs. Holidaymakers will also pay more to travel this summer. British Airways announced its third fuel surcharge increase today, putting up to £20 on the cost of a long-haul flight.
Motoring groups urged the Government to intervene to avert further price rises.
“Our feeling is this is just the market maxing out on bad news stories to try and justify pushing up the price of oil,” said Luke Bosdet of the AA. “The Government needs to get a grip and try and figure out the reality of the situation. Are the markets out of hand, or is the price of oil justified?”
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Average petrol prices returned to 133.55p per litre, the same level as on March 21 before the Chancellor announced a penny cut in fuel duty.
The AA calculated that despite the Budget duty reduction the Treasury was reaping an additional £1.9 million every day from its decision to raise VAT on fuel to 20 per cent in January.
It costs £7.74 more to fill an average fuel tank than it did a year ago.
Adrian Tink, motoring strategist at the RAC, said: “The Chancellor made a great deal about the ‘Fair Fuel Stabiliser’ but it’s only stabilising government revenue — motorists are still going to be hit by the rising cost of fuel. And, just to add to the pain, the delayed inflationary increase of 3.02p is due to come in on January 1. Who knows what the price of fuel will be at this point?”
The Office of Budget Responsibility predicts that crude prices will remain around $110 dollars for the remainder of this parliament.
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A spokesman for Mr Huhne said that the market was reacting to unjustified fears about future energy supplies. However, he said there were no plans afoot to convene an international meeting of energy ministers.
Environmental campaigners said the high pump prices provided yet more proof of the need to wean Britain off oil.
Friends of the Earth’s senior climate campaigner, Tony Bosworth, said: “For too long, successive Governments have been treating the symptoms and not the cause, and now we’re all paying a hefty price.
“We need rapid action to develop clean energy and greener cars, and real alternatives to driving such as better public transport and more walking and cycling.”