How petrol giants STILL refuse to slash prices despite oil falling by 25 per cent in two months

Motorists are still being hit by rises in petrol prices – even though oil is up to 25 per cent cheaper than in mid-July.

The failure of oil companies to pass on the dramatic drop has led to accusations of profiteering and rip-offs.

Unions, motoring groups and some politicians are calling for windfall taxes on company profits.

Tonight oil prices were at their lowest for five months as the market reacted to Hurricane Gustav causing less damage than had been feared in the Gulf of Mexico production area.

Yet the AA reported that the average price at the pumps has actually risen by 0.5p a litre – to 112.72p – since the end of last week.

The motoring organisation said an 18 per cent drop in the wholesale price of petrol has not been fully passed on.

It calculates that this should have brought an 8.5p reduction. Yet when oil prices soared earlier this year, the AA said, oil companies were quick to pass on the rises.

International oil prices rose almost every day from April 13 through to June, as speculators used any excuse to drive them up.

But they have been dropping steadily since July. UK petrol prices hit 119.7p a litre on July 17 but have fallen far less than the cost of oil.

Diesel, which peaked at 133.25p a litre, is now 124.19p a litre – after a rise of 0.19p since Monday.

AA spokesman Luke Bosdet said: 'There has been a seismic shift in the price of oil.

'The wholesale price of petrol has dropped 18 per cent. Yet the price of petrol and diesel is going up. One has to ask: What is going on?'

The industry has been very keen to point out that it takes four to six weeks for changes in the price of oil to work their way through to the pump.

'In that case, the 25 per cent drop should be bringing prices down at the pump right now.'

Supermarkets such as Asda, Tesco and Morrisons have slashed prices significantly, forcing neighbouring oil company sites to follow suit.

But prices have remained high in areas where there is no supermarket outlet, says the AA.

Critics say oil giants are 'dragging their feet' despite making billions in profits.

Shell has just unveiled record half-year profits of nearly £8billion following BP's £6.75billion. But the companies deny profiteering.

Last night BP said prices were still fluctuating in a volatile market.

A spokesman said: 'We are being as competitive as possible and reducing prices where and when we can, site by site.'

The AA said it accepted that the slide in the value of the pound has had an adverse effect, as oil is traded in dollars, but there should still have been some relief for motorists.

A survey last month showed British drivers pay more for fuel than those in other major European countries. Petrol costs 96p a litre in Spain, for example, and diesel £1.

Hopes of further falls in oil prices may be dashed by the Arab-dominated producers' cartel OPEC, which has signalled it may restrict supplies to keep the level above $100 when it meets next week.

Last night Brent crude was trading at $107.25.