Petrol set to rise by six cents per litre

Petrol prices are expected to increase by five or six cents per litre in two or three weeks' time, following recent surges in oil prices.

But it is predicted that homeowners may yet suffer the brunt of the price hikes.

Oil's record-breaking rally took US crude over $52 a barrel, a new all-time high, fuelled by the impact of Hurricane Ivan on US winter inventories. US light crude climbed to a peak of $52.02 a barrel before easing to $51.90, up 89 cents on the day. London Brent, the benchmark for European imports, set a record $48.02.

Motorists will start to notice the effects of the record highs at the petrol pumps before the end of the month, a spokesman for the AA, Mr Conor Faughnan, said yesterday.

"If prices are sustained at the $50-$51 level and nothing dramatic happens with the euro, we would expect to see an increase of about five or six cents per litre," Mr Faughnan said.

Average petrol prices were about €1 per litre as of three weeks ago and could now move as high as €1.06 or €1.07 per litre, according to Mr Faughnan.

Currency exchange rates also determine the price of fuel, and during the year Irish consumers have been partially sheltered from the effects of escalating oil prices because the dollar has been weak against the euro.

The latest surge in prices has been spurred by the aftermath of Hurricane Ivan in the US, but Mr Faughnan said crude oil prices tended to rise around this time of year because there was greater demand for home heating oil in the northern hemisphere.

However, he said it was not unusual for certain crude oil products to increase disproportionately to others.

"It is conceivable that we might see big spikes in home-heating oil prices and lesser spikes in petrol prices. You do sometimes see those patterns," Mr Faughnan said. Home heating oil in the Republic is currently about 56 cents per litre.

Mr Faughnan also accused the Government of scoring an own goal by increasing excise duty on fuel in last year's budget.

"Only 10 months ago, petrol prices were averaging at 89 cents per litre. That went up to €1.01, dropped a little for a while and is now expected to go up again. That is a very dramatic increase over 10 months," he said.

"Motorists have had to contend with extra excise duty on top of high oil prices."

Meanwhile, the Organisation of Petroleum Exporting Countries lifted production last month by 690,000 barrels a day (bpd) to a 25-year high of 30.15 million bpd. But most of the extra oil came from disrupted Iraqi output after repairs following sabotage attacks. Spare world capacity is now limited to Saudi Arabia.