No end in sight to record US fuel prices

As small business groups complained about record petrol prices in the US this week, the government released figures showing that costs would rise still further, and that petrol consumption is falling dramatically.

The Energy Information Administration's (EIA) Short Term Energy and Summer Fuels Outlook report estimated that petrol prices could hit $4 per gallon in certain parts of the US this summer, and that the monthly average price was expected to peak at $3.60 per gallon this spring.

The news came at a bad time for customers. Petrol prices at the pump reached an all-time high this week, according to the American Automobile Association, hitting $3.357 per gallon for regular fuel.

The increased prices also appear to be having an effect on fuel consumption. The EIA's Motor Gasoline Consumption 2008 report predicts a 0.3 per cent decline this year, the first decline since the recession of the early 1990s. The decrease was due in part to price increases on a scale not seen since the Iranian revolution of 1979, the report said.

"While we're seeing a slump in demand in the US because of the increased price and the economic downturn, it seems like demand in developing countries is overtaking any slow down in the US that would tend to drive prices down," said Chris Miller, who heads up the climate change programme at Greenpeace US. "We don't expect a downturn in petrol prices, and no-one's predicting that we'll return to $2 per gallon."

As the figures emerged, representatives of the US small business community testified before a House Small Business Committee, arguing that increased petrol prices could force small business owners into bankruptcy.

The soaring prices are set to further increase pressure on firms to curb co rporate travel and invest in greener, more fuel efficient fleets.