Oil surge prompts MPs to launch probe

OIL surged to record highs as a powerful committee of MPs announced a new investigation into the effect of rising energy costs on consumers and businesses.

The move by the Trade and Industry Select Committee comes after last week's report by industry regulator Ofgem, which found consumers face a combined £3.6bn-a-year increase in power bills.

The committee will look at whether the price rises are likely to be temporary or mark the beginning of a long-term increase.

On world oil markets, US crude set a record $54.45 a barrel, before retrenching to $52.50. Brent crude hit $51.50, but slipped back to $49.60.

The rise was driven by worries over winter demand, along with industrial unrest in producing nations including Nigeria.

Shell refused to comment on reports that Goldman Sachs and Kohlberg, Kravis Roberts plan to bid for its liquefied petroleum gas business, valued at around £930m. It is reviewing the operation, which is expected to take 12 months. It added that it is likely to lose 20,000 barrels a day of production 'for a few days' following a leak and fire at a Nigerian pipeline.