90P-LITRE PETROL WARNING
Petrol could rise to around 90p a litre in the event of a war with Iraq, according to a new report.
Accountants Tenon said that in a "realistic worst-case scenario" a war could force the price of crude oil up to $60 (£37.50) a barrel.
This, in turn, would have a knock-on effect on prices at the pump, pushing petrol up from around 74p a litre at present to as much as 90p.
Tenon chief economist Maurice Fitzpatrick said the current petrol price was based on oil at around $26 a barrel.
Exports
This was the fairly consistent price until a month ago, when Venezuela's national strike hit its oil exports.
Mr Fitzpatrick reckons every $10 added to the price of oil puts 3.9p onto a litre of petrol.
Adding in VAT, it gives a pump price of 4.6p.
On this method, oil prices at $40 would equate to petrol prices of 80p a litre, at $50 to a price of 85p and at $60 to around 90p.
He added that an increase in the oil price would also lead to a "cash bonanza" for the Treasury as North Sea tax revenues climbed.
Production
Mr Fitzpatrick said an oil price rise to $60 would give the Treasury £875m in extra revenue for each month it was sustained.
The oil price is currently hovering at around the $29-30 mark, buoyed up by the prospect of a war with Iraq and the Venezuelan strike.
The price reached two-year highs on Monday of more than $31 a barrel.
But it slipped back again after the oil producers' cartel, OPEC, indicated it would raise production quotas unless prices dropped heavily over the next fortnight.
OPEC has a target range of between $22 and $28 dollars a barrel, which it works to sustain by increasing or decreasing output.
