OPEC threatens crude price rise
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The recent reduction in diesel prices could be shortlived if the oil producing nations agree to cut production.
Several members of Opec (the Organisation of Petroleum Exporting Countries) are Calling for production to be slowed when the group meets on 17 January in a move that would eventually push the price back up.
Since last autumn the price of a barrel of crude oil has fallen by almost $10 to the current level of just under $25. However, many of the smaller Opec members fear that increases in production announced last time the organisation met have already pushed prices too low. The debate over whether Iraq should be allowed to produce and sell more of its oil adds to the uncertainty.
Despite this. oil giants BP and Shell say falling diesel prices are unlikely to be reversed in the immediate future—but two months ago they were predicting that prices would rise this year.
Last week BP cut the price of its diesel by 2p/ht, making an average of 111.5p/lit across the country. Spokeswoman Barbara Peen says: We expect this reduction to be sustainable."
Shell spokesperson Tom Kearney agrees that prices are stabilising: "Clearly if there are continued reductions in the price of crude oil we will reflect that in the price our customers pay."
• MPs Martin Salter and Peter Bradley are calling on Chancellor Gordon Brown to introduce a windfall tax in his next Budget if the oil companies fail to cut pump prices by 3p/lit by the end of the month.
"Precktably, they've failed to pass on the benefits to motorists, now that the price has come down," says Bradley. "If they refuse to regulate themselves, perhaps the threat of a windfall tax would concentrate their corporate minds."