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No decision would be taken about it until nearer the time

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No decision would be taken about it until nearer the time."Among the other losers in the great oil game are the airlines. The Chancellor announced a 1.9p per litre extra duty in his latest Budget, but deferred its introduction until 1 September."We are already paying a high price at the pump," says Mr Holloway. "Gordon Brown will come under pressure not to introduce the duty. His option is to consider whether British businesses can cope with the type of strikes we had before."Farmers and road hauliers are particularly opposed to the planned hike, he adds.The average price for a litre of unleaded petrol in the UK last month was 78.6p, according to the Automobile Association Prices have since increased to 80p per litre in some areas. The highest monthly average in the last three and half years was in June 2000, when prices hit 85p.But Mr Holloway says there is room for negotiation: "Our first thought is not to protest."A spokesman for the Treasury says it is in regular contact with road user groups about issues such as fuel duty but adds that it has no plans at the moment to defer the September increase "We always keep the position under review. But in many ways, the current outlook for oil is more serious. Today's high prices are not the result of manipulation by a cartel.

They are instead the product of a longer-term trend: the world is consuming oil at a faster rate than it can find it. In the 1970s, Opec backed down and prices returned to more acceptable levels. If only the solution were that simple now.ALL HANDS TO THE PUMPS: WINNERS AND LOSERS FROM THE FUEL FALLOUTThe recent surge in oil prices has raised the spectre of a repeat of the fuel strikes in September 2000, which almost ground the country to a halt.Ray Holloway, the director of the Petroleum Retailers' Association, who helped co-ordinate the protests, has warned Gordon Brown, against raising petrol duty. Mr Birol at the IEA says: "Developing countries like India can't afford these rises. They suffer more than OECD [developed] countries."Prices are not as high as during the 1970s oil crisis, when crude hit over $70 a barrel in today's money after Opec turned off the taps.

John Butler, an economist at HSBC, says companies are more sensitive to higher oil prices because margins are already low: "In the past, they have tended to be a cost that companies have been able to pass on. Now, perhaps because of greater competition, this is not always possible. The impact may not be in terms of rising RPI [retail price inflation] but more in dampening profits, hurting employment and a negative impact on GDP growth."The developing world will be still worse off, the IEA warns, as the poorest economies use more oil and less efficiently. The IEA adds that the current high prices are hurting the global economic recovery, noting that sustained oil price inflation from 1999 contributed to the downturn in 2001.The UK is still a net exporter of oil and gas, but will become a net importer by the end of the decade as the North Sea fields age. And their currencies would also become devalued as the dollar-denominated bill for imports increased, also raising the cost of servicing Third World debt.

It estimates that a sustained $10 a barrel increase would cut the GDP of countries in sub-Saharan Africa by more than 3 per cent. Oil consultancy Wood McKenzie estimates the industry paid £9.5bn in total in tax to the Treasury last year. Because production is falling (in 2005 the UK will become a net importer of gas), the tax take is unlikely to be equalled, even with high oil prices.Businesses will also be affected. If the oil price sustains the $10 per barrel increase from $25 to $35 for a year, in the developed world, inflation will increase on average by 0.5 per cent, GDP will fall by 0.4 per cent and unemployment will increase, the report predicts The impact will be bigger the more oil a country imports. In other words, with demand expected to remain strong, and no gush of new oil predicted in the foreseeable future, the current high prices are unlikely to be a short-term phenomenon.The IEA released a report last week analysing the effect of this on the global economy It makes for sober reading. "It's better to have medium prices and higher production than high prices and see their market share decline to non-Opec producers."In the short term, however, the scope for outside producers to meet the shortfall is limited.

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