Drivers hit by yet higher petrol costs

Record oil prices and the impact of the Grangemouth refinery dispute left the average price of unleaded petrol on the brink of £5 a gallon.

The AA said UK motorists are paying an average of 109.8p a litre for unleaded, equivalent to £4.99 a gallon.

It came as the Grangemouth stoppage entered its second day and crude oil prices reached a new record of 119.93 US dollars a barrel, before falling back by just under a dollar.

The 48-hour refinery walkout has been described as an "aggravating factor" in crude's latest spike. It saw BP close off a major North Sea oil pipeline powered by the site and has also led to fuel supply concerns in Scotland and the North of England.

Drivers were today facing rationing at some of Scotland's 956 petrol stations as motorists rushed to fill up their tanks.

Oil's record run over recent weeks - crude prices are up nearly 20 per cent during the past month alone - has helped push UK petrol and diesel prices to their new heights. Diesel averaged out at 119.8p a litre today, up more than 25 per cent over the past 12 months.

AA spokesman Luke Bosdet said: "There are stoppages at a couple of refineries across Europe, so what's happened at Grangemouth has just aggravated the situation.

"UK drivers are going to the pumps each week and watching prices going up and up and up."

The Grangemouth shutdown also comes amid supply outages in Nigeria that have helped to support oil against a strengthening dollar. Demand in the US is high for Nigeria's light, sweet crude, which is easily refined.

Victor Shum, an energy analyst with Purvin & Gertz in Singapore, said: "We've got a confluence of a number of events that have really disrupted crude oil supply. That's what's driving oil to a new record even though the US dollar actually strengthened a bit."

In London, Brent crude futures rose 84 cents to 117.18 US dollars a barrel on the ICE Futures exchange.

Oil traders are expected to closely watch the outcome of the US Federal Reserve meeting tomorrow and Wednesday for guidance on US interest rate movements - a major factor governing oil prices.

Image: The cost of filling up a car in the UK continues to rise

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