Oil price surge adds fuel to truckers' ire

6.15pm BST update

Terry Macalister
guardian.co.uk, Monday June 30, 2008
Article history

The price of oil hit a new record of nearly $144 a barrel today threatening to put further pressure on pump prices ahead of the first fuel price protest officially backed by the Road Haulage Association.

The value of sweet US crude for August delivery rose by more than $3 in New York to $142.99 while North Sea Brent crude futures reached $143.99.

The latest spike in oil prices was blamed on a mixture of rising political tension between Iran and Israel and further expected falls in the value of the dollar against which crude is often used as a hedge.

Traders have been unnerved that Middle East oil supplies could be disrupted after Iran's Revolutionary Guards threatened to impose restrictions on shipping in the Gulf - through which 40% of the world's oil is exported - if Israel launches an attack.

"The main factors behind the rise today are the US dollar remains fragile and geopolitical tensions, particularly surrounding Iran," said David Moore, a commodity strategist at the Commonwealth Bank of Australia. "That's unsettling for the oil market."

The European Central Bank may raise interest rates at its next meeting on Thursday, a move that would help strengthen the euro against the dollar, Moore added.

A survey in the US, meanwhile, showed that prices at the pump continued to rise, with the national average for gasoline at $4.086 a gallon. The previous record of $4.08 was reached on June 16 while petrol and diesel prices in Britain have also been soaring.

BP said the average price of its UK forecourt diesel was now 133.5p a litre - compared with 98.2p a year ago - while unleaded petrol now cost 120.3p compared with 97.2p a year ago.

The Road Haulage Association, the official truckers' lobby group, said it was supporting a protest planned for central London on Wednesday. Kate Gibbs, a spokeswoman for the RHA, said the organisation could no longer stand by because the situation for its members had become an "absolute nightmare".

Lorries from all parts of the country are to meet on the M40 motorway and drive under police escort to Westminster alongside a foot lobby of parliament.

Andy Boyle, a road haulier himself and the RHA's national chairman said: "Our industry is being driven out of business. It is madness to insist on charging the highest level of fuel duty in the European Union on top of a world (oil) price that has rocketed."

Meanwhile the heads of some of the world's biggest oil companies countered Opec claims that speculators were driving high oil prices, instead blaming a dearth of new supplies.

The chief executives of BP, Shell and Spain's Repsol told the oil industry's biggest gathering in three years that restrictions on where they can invest and high taxes meant they could not help boost supplies as much as they might.

BP's CEO Tony Hayward said the argument that financial investors buying oil futures were behind a four-year rally that pushed oil prices to new records above $143 a barrel on Monday was a "myth".

He said the problem was a failure of supply growth to match demand growth. "Supply is not responding adequately to rising demand," he told thousands of delegates at the World Petroleum Congress.