US petrol prices hit 99p a gallon

PETROL prices in the US have climbed to a record, with a survey over the weekend finding average prices of $1.80 (99p) a gallon, and analysts are warning that the trend is taking a toll on consumer confidence.

Americans have not paid as much for petrol since the early 1980s, says Trilby Lundberg, who compiles the Lundberg Survey of 8,000 petrol stations across the country. He says there is little chance of prices falling as Americans prepare for their driving season, during which they take to the roads by the thousand and tour the country.

'The demand push this time of year is adding to supply tightness and therefore price,' Lundberg said. 'I don't see any recipe for substantial gasoline price cuts anytime soon.'

One reason for the steep rise in petrol prices has been an attempt by the US government to rebuild its strategic petroleum reserve. The government is diverting 18m barrels of crude from the consumer market to the reserve, driving up open-market prices.

The cost of petrol will be a major factor affecting the personal finances of many US consumers. Some economists have calculated that the price rise has already cancelled out the benefits of President Bush's tax cuts for the average US middle-class family.

The price rise is particularly painful for owners of gas-guzzling SUVs (sports utility vehicles) the sales of which have boomed in the past few years. It could also be painful for the Bush administration in an election year, giving voters one more grievance to add to those over Iraq and job shortages.

The White House is therefore particularly-eager that Opec, which meets on Wednesday with plans to cut production by a further million barrels, postpones that decision. US officials have been lobbying the producers' cartel.

Representatives of some oil producing countries said last week that the cut has already in effect been delayed, because the mechanism to implement it has not yet been set in progress.

The University of Michigan survey of consumer confidence has recorded only a small rise in sentiment and analysts say that concern over jobs and high petrol prices will continue to erode the measure.