Peak in Crude Oil Prices Could Stall Economic Recovery – Back in July 2008 when oil prices peaked at $147 per barrel we were paying 119.7p per litre at the pump. Now crude oil is trading at around $80 (£50) a barrel and prices at the pump have reached a record high of 120p per litre.

So who is to blame for the current surge in UK petrol and diesel prices?

A substantial proportion of it can be put down to a falling pound. When the price of Brent crude peaked at $147 two years ago, the dollar to pound exchange rate was almost two to one. This meant that the sterling cost of a barrel of oil was about £70.

Today, Brent crude is trading at $85 a barrel – but the petrol price has crossed the 120p a litre threshold. However, the pound is now trading at 1.53 to the dollar. This means one barrel of oil in sterling terms costs about £55, so oil is only 20pc lower than its 2008 price for those buying in British pounds.

Another reason why we are paying more for petrol than at the start of the economic downturn two years ago is because the Government has edged up petrol duty by yet another 1p to 57.19p per litre on 1 April, which is the fourth rise in 18 months.

“High fuel cost effects the entire economy. When prices at the pumps go up, nearly every business and consumer in the UK suffers. It is probably no coincidence that the previous record high prices in the summer of 2008 were soon followed by full-blown recession,” said Matt Goodman, the Forum of Private Business policy representative.

High petrol prices are clearly not good news just as the economy was showing signs of recovery.

According to the International Energy Agency (IEA), global economic recovery could be put at risk if oil prices remain above $80 (£50) a barrel.

The IEA predicted the global demand for oil would hit a record high this year, revising up its consumption estimates. It said demand would reach an average of 86.6m barrels per day, up from 84.93m in 2009. The previous record high was 86.5m barrels per day in 2007, before the onset of the global financial crisis.

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