Lower fuel prices 'may not last'

Petrol retailers are warning that the recent cuts in prices at the pumps could last for just a few weeks due to fluctuating global currency markets and a stronger US dollar.

Prices were cut at forecourts across the UK after the price of crude oil fell below $100 (£54) a barrel for the first time since April, and well below the peak in July of $147.

However, the cost of fuel is not determined solely by the oil prices, the Petrol Retailers' Association (PRA) said. The group's director, Ray Holloway, added: "All oil products are priced in US dollars, therefore exchange rate variation impacts on the retail pump price.

"If the exchange rate of August 1 (£1.974 to $1) applied on September 12 (£1.792 to $1) motorists would be paying approximately 5p less for each litre."

Mr Holloway added: "In the US we're going to have two important events this year - the Bush administration is going to come out with its plan for turning the economy round, and the other is the election. Both of these are likely to strengthen the dollar, which will mean more expensive fuel for the motorist in this country."

Prices have been cut by BP, Morrisons and Asda, with Shell, Esso and Total saying they would be following suit.

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