Petrol prices may soar again

Petrol may cost £1.20 per litre by Christmas, the RAC is warning.

Petrol prices have been increasing steadily this year as the price of crude oil has risen in wholesale markets.  If the cost of oil continues to rise, motorists could be paying £1.20 per litre by Christmas.

Crude oil is currently trading at $67 a barrel, a long way from the $147 peak price last summer, however new fuel taxes and a resumption of the 17.5% VAT rate in January will drive petrol and diesel prices upwards.

There will be a 2p per litre rise in fuel duty in September. In addition, Alistair Darling has announced 1p above-inflation rises every April for the next four years.

For every litre of petrol bought by motorists, 70 pence is payable as tax to the government.