Thirst for oil keeps petrol price rising

If you think petrol prices are already too high, the bad news is that they are likely to get even higher.

Crude oil prices touched US$60 ($85) a barrel for the second consecutive day on Friday, causing world markets to shudder.

Oil traders have warned that prices are likely to rise higher yet, as China and India gobble up supplies.

International airlines are already feeling the pinch. British Airways and Virgin Atlantic announced yesterday they would increase their fuelsurcharges - in British Airways' case, by as much as50 per cent.

But New Zealand companies contacted by the Herald on Sunday said they would continue to absorb the extra costs.

Air New Zealand spokeswoman Rose Paul confirmed the airline had no plans to further hike its surcharge, and at least two taxi companies - Auckland Co-op Taxis and Alert - said no price rises were imminent.

Mainfreight owner-driver Kelvin O'Connor, from Ashburton, said he and other owner-drivers would justhave to put up with higherfuel prices.

Mainfreight had not increased its delivery rates for a couple of years, according to Mr O'Connor. However, it provided owner-drivers with a monthly subsidy to compensate for higher fuel costs.

In Britain, fuel prices are now at the level that five years ago sparked the great petrol protests which nearly brought the country to a standstill.

And across the Tasman, motorists groups have claimed some families will soon have to give up using their cars.

Prime Minister John Howard acknowledged yesterday that soaring petrol prices were "painfully high", butsaid there was nothing he could do.

While the price of oil is still below its all-time peak when adjusted for inflation, economists are concerned higher fuel prices will cut intoconsumer spending and corporate profits, slowing the world economy and pushing up inflation.

Growing concern over the issue has prompted the leaders of the Group of Eight industrialised countries to move energy prices to the top of the agenda for their meeting in Scotland next month.

- HERALD ON SUNDAY