Tax rise fuels petrol price fears

Petrol prices could surge to near record highs from after the government's 2p rise in fuel duty came into effect on Monday morning.

The 2p increase could push up the average price of unleaded petrol to about 98p, while diesel could exceed £1 if the cost is passed on to motorists.

The increase, in line with inflation, was first announced in Gordon Brown's 2007 Budget when he was chancellor.

The duty rise comes amid soaring oil prices and high borrowing costs.

The Budget also outlined another rise of 2p a litre next April and a further increase of 1.84p in April 2009.

Petrol Retailers Association director Ray Holloway said the rise would put "undue financial strain on motorists and petrol retailers alike".

He said the number of petrol stations was already falling and it would "not take much to push more stations out of business".