MOTORISTS face the prospect of petrol prices soaring by 10c a litre if the cost of oil continues to surge on the back of unrest in the Middle East, it was warned yesterday.
Oil prices soared as high as $108.50 -- just short of €80 -- yesterday for a barrel of Brent Crude, the highest in two-and-a-half years as riots in Libya increased anxieties about supply.
And Irish drivers already paying record prices could see the cost of petrol rising to around €1.55 a litre if oil prices continue to rise towards the record level of $150 (€109) a barrel seen in 2008, Automobile Association (AA) policy director Conor Faughnan warned.
"There is every prospect prices at the pumps will rise in the next three weeks as these latest oil prices feed into the system, and we could be talking about an increase of 10c per litre in coming months if world oil prices rise by the same amount as in 2008," he said.
Reducing the price of fuel should be a priority of the incoming government as further increases will have knock-on effects on every sector of the economy, he warned.
Prices nationwide are already averaging 144.5 cent a litre, according to an AA survey.
The new government should immediately remove the excise increases of 4c per litre on fuel introduced in the last Budget or the whole economy will suffer further, Mr Faughnan said.
With 96pc of freight moved by road and no nuclear power for fuel generation, Ireland is one of the most oil-dependant countries in the world -- using 50pc more oil per person than the UK -- so the Irish economy would be more exposed than others to high prices.
The International Energy Agency warned yesterday that rising oil prices posed a danger to global economic recovery, but their chief economist Fatih Birol said industrialised countries were standing ready to release oil from stockpiles to compensate for Middle East supply disruptions.
Airline shares also tumbled yesterday in response to the threat of further oil price hikes, which led to huge fuel surcharges on fares two years ago.
Unrest in Libya, which is the world's 12th-largest exporter of oil, resulted in prices rising as credit rating agencies predicted that the violent outbreaks of recent days could persist.
There are also fears that the unrest could spill over into the big producers such as Saudi Arabia and Kuwait.