Petrol bursts through £1 a litre as oil prices surge again - and it won't stop there

There was misery at the pumps as the psychological barrier was breached in several rural parts of the UK as world oil prices surged to record levels.

The grim situation threatens to get even worse during the run-up to Christmas, prompting fears there will be a repeat of the damaging fuel protests of 2000.

Motorists have already been hit by the Chancellor's fuel duty increase of 2p a litre on October 1 and it will rise again in April 2008 and 2009.

Yesterday, a garage forecourt in Dulverton, Somerset, was selling a litre of petrol for £1.03p and diesel for £1.06p a litre, while in the nearby village of Upton on Exmoor, the price of diesel was £1.05p.

Across Britain, the national average price for diesel was £1.01p a litre, and for unleaded 98.4p, according to forecourt analysts Catalist.

Experts expect these figures to soar as the effect of rising oil prices filters through the system.

Yesterday, oil prices surged above $93 (£46.50) a barrel on Wall Street as political tensions in the Middle East and a weak U.S. dollar saw the cost of crude oil soar to new trading highs.

Kevin Delaney, spokesman for road safety organisation the IAM Motoring Trust, said: "My advice to motorists is to make the most of it while the prices are still what they are."

"I'm betting that next week the average price of unleaded will be comfortably over a pound a litre, and diesel will be around the £1.03p mark."

"The prices we are seeing at the pumps today reflect the price of oil a few weeks ago - it takes a while to filter through."

"So the oil price rises of today will hit the filling stations in a few weeks. Christmas could be an expensive time."

Demand for diesel always goes up during winter as it is a heating fuel, but this year there are other factors at play too.

The booming economies of China and India are claiming more and more of the world's oil supplies to power their factories and transport.

Meanwhile the political situation in Iraq is pushing up prices because of fears that Turkey could invade Kurdish northern Iraq, where huge oil fields could be rendered out of action.

Mr Delaney said: "If the Turks go for it, and the U.S. dollar continues to fall, I wouldn't be surprised if we see diesel costing £5 a gallon by Christmas."

"Prices have gone up and they are not going to come down any time soon."

Hauliers warned that their industry is being crippled by the increases in taxes and rising oil prices.

Campaigners are talking about repeating the dramatic fuel blockades of 2000 when the country was brought to its knees until the Government capitulated.

After those protests, the controversial 'fuel duty escalator' of automatic annual increases was shelved, but Chancellor Alastair Darling has been accused of stealthily reintroducing it.

Kate Gibbs of the Road Haulage Association, said: "There really is an awful lot of unrest out there, and hauliers are getting so desperate they will try anything."

"The protests of 2000 were so successful they are hard to repeat, but I get the feeling that hauliers feel they have no choice."

"It is not getting any better and we are very disappointed in the new Chancellor."

She added: "An extra few pence on a litre of fuel does not sound much to some people, but when you are regularly filling up an HGV and driving 100,000 miles a year, it costs an extra £3,000 and can seriously threaten the livlihoods of hauliers."

The Treasury expects to make nearly £25billion from fuel duties this year - more than the combined total from inheritance tax, capital gains tax and stamp duty. For every £1 spent on petrol, more than 60p goes to the Government.

That will go up with increases of another 2p in April 2008 and 1.84p in 2009 which were announced by Gordon Brown earlier this year when he was Chancellor.

The Treasury has said the policy remains unchanged since the increases were announced in the 2007 Budget in order to "fund public services and send out the right environmental signals in our fight against climate change."