£5 gallon is on the way

The £5 gallon of petrol is "just around the corner" for the West Midlands, the AA warned today as oil prices hit new record highs.

The average price of a litre of unleaded petrol in the region is now 108.1p – the equivalent of £4.91 a gallon.

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It has risen more than a penny a litre in the past month and is edging ever closer to the 110p mark which would signify the £5 gallon.

Diesel has soared to 117.5p a litre in the West Midlands, or £5.34 a gallon, slightly above the UK average of 117.4p.

The AA warned today motorists are having to cut back on spending elsewhere in order to keep their cars running.

Soaring prices on the nation's garage forecourts have been driven by the cost of oil, which has grown by 20 per cent so far this year and is now at a record 115 US dollars a barrel.

AA president Edmund King said: "UK motorists are spending more than £10.2 million extra on fuel each day compared to last year. This is beginning to hit the economy with car-dependent motorists cutting back on other expenditure."

Mr King called on Chancellor Alistair Darling to abandon his proposed 2p per litre increase in October. Mr Darling had planned the rise for this month before postponing it in last month's Budget.

He said: "Families are having to reduce high street spending and businesses, low-income and rural drivers are becoming more vocal about the impact of high fuel prices on their financial well-being."

Economist Howard Wheeldon from BGC Partners said there were few signs that the higher prices were leading to cutbacks in car use. He said: "Nothing it seems is about to halt the insatiable rising global demand for gasoline and no matter what the price consumers remain very willing to pay to fill up the car."