The oil price has been steadily climbing over the last couple of years, after tumbling from as high as $147 a barrel to below $40 a barrel at the end of 2008. But that drop in Libyan production – which fell by 8% over the weekend, from 1.6m barrels a day – isn’t helping matters.
And this hits drivers in the pocket. According to the AA, ‘the rule of thumb is that every $2 rise in the price of oil equates to 1p a rise at the pump’ – which means we’re in line for an extra 2p to be added ‘within days’. So the average driver will have to stump up about £90 to fill up a 70-litre tank (in fact, it’s got so bad that some rogue customers in Dorset made an appropriate change to a petrol sign on Monday). Asda said yesterday that one in three shoppers is now buying ‘exactly’ £30, £40 or £50 worth of petrol, up from one in five before the recession; it reckons this is clear evidence that shoppers are being forced to operate on tight budgets.
In all likelihood, these latest price hikes may put paid to Chancellor George Osborne’s plans to add a ‘1p plus inflation’ duty to fuel prices as part of his Budget in March – which might end up driving fuel prices up by 5p a litre. We can’t imagine voters (at least the car-driving ones) being terribly receptive to that idea now.
Then again, higher profits for the oil industry do have an upside, as far as UK plc is concerned. New figures from Oil and Gas UK suggest that our offshore oil sector is enjoying something of a resurgence. Apparently, investment in the sector increased from £4.9bn in 2009 to £6bn in 2010 – and could rise to £8bn this year, potentially creating between 10,000 and 15,000 new jobs. A positive note on which to end…