THE price of petrol in York has crashed through the £1-a-litre barrier for the first time this year.

Rising oil costs are leading to fuel providers across the country raising their prices.

In the city, super-unleaded petrol is now selling for as much as £1.09 per litre, and diesel has reached a high of 99.9p.

Service stations across the area have just increased their prices, or are preparing to be informed of a rise this week.

It comes after the cost of oil reached 70 dollars a

barrel, due to concerns over Iran's nuclear programme, looming supply shortages and strong demand.

The AA warned that a ten dollar a barrel increase over the past two months was likely to push the price of unleaded petrol close to £1 on many forecourts across the country.

Spokesman Luke Bosdet said: "At the moment, the price of petrol is rising by a penny a week. It is going to carry on creeping up."

Prices were raised at the BP service station in Tadcaster Road last week and ultimate unleaded now costs £1.09 a litre, while diesel is still only 96.9 and unleaded costs 93.9p.

Manager Heather Archer said: "It is a decision made by the Co-operative, which owns us, based on the petrol prices generated from BP.

"We hope there will not have to be another rise in the next few days, because it is quite rare to have two price rises in a week."

At the BP petrol station at Bilbrough Top, ultimate petrol had also topped the £1 mark and was selling at £1.05, while diesel was 99.9p and unleaded was 97.9p. A staff member said prices were raised last week "due to the increasing price of oil".

Peter Colley, owner of the WCF filling station at Gate Helmsley, said he believed buying petrol at £1 a litre would soon become the norm.

"Prices at a lot of petrol stations for diesel and super unleaded are already 99.9p or higher, so it won't be long before ordinary unleaded goes the same way," he said.

"But whatever price fuel is, people will buy it, because they have no choice if they want to run a vehicle. That is what the Government and the fuel companies bank upon and if the price goes over the £1 mark, it won't be a surprise.

"I was talking to someone who suggested the increases were down to a shortage in America and that we are shipping oil out there."

The petrol station on the A166 between York and Stamford Bridge saw the price of its ordinary unleaded soar to 99.9p following the aftermath of Hurricane Katrina last September.

Prices are currently 96.9p for unleaded and 97.9p for diesel and Mr Colley is waiting for a delivery to find out whether there must be an increase.

David Lord, manager at Leeman Road Filling Station, York, where diesel is already 98.9p and

unleaded costs 96.9p, agreed: "The £1 barrier is not far off and prices are steadily increasing all the time so I think the day

will come when it is the norm.

"The price has gone up on the New York stock exchange because of troubles in the Far East and as soon as American prices go up, then there is a knock-on effect here."

At Innerspace Service Stations in Boroughbridge Road and Hull Road, in York, which are also BP garages, the cost of ultimate fuel has already been raised to 99.9p, while diesel costs 97.9p and unleaded costs 95.9p.

Manager Julie Hammond said: "I think the increase is something to do with the situation in Iran and less oil being available.

"If the price of oil rises per barrel, eventually the cost gets passed on to us, and so we had to raise the price of our unleaded by 2p and our diesel by 1p yesterday."

Hauliers hit hard

ROAD hauliers in York today said they were at the sharp end of the problem as rising diesel costs further damaged business.

Roy Handley, owner of A1 Plant and Haulage (York) Ltd, of Elvington, said the cost of fuel had risen from about £15,000 to £20,000 a month in the last year.

"It is always going up and down," he said.

"Diesel is about 80p or 85p a litre now and once you've added VAT on top, your paying about the same as people would at a filling station.

"When you're buying 20,000 litres at a time that is a lot of money - but we have to just grin and bear it.

"We have a lot of loyal customers and we can't just say we're putting prices up because we'd be doing it every two minutes and it wouldn't be fair.

"If there were fuel protests again I would take part - they'd just have to give me a call," he said.

"But we need the public to support us, and not start shouting abuse just because they're stuck on the ring road."

Mr Handley said his firm, which has 12 vehicles, was the only large haulage firm left in York and was facing competition from companies in Leeds which were managing to undercut.

"It's not just fuel, insurance is going up along with other costs," he added. "We could do with grants to help us, but we won't get them."

Alan Wright, of Wrights of Crockey Hill, said: "The price of diesel is always going up and has been creeping higher in the last week or two.

"At the moment we're having to absorb the extra cost and it does concern us, but I'm so busy with work I haven't had time to look at it.

"I haven't had any feedback from other hauliers, so I don't know how they're coping."

Mr Wright had been ready to take part fuel protests last autumn, but said he had not heard of any plans this time.

York bus operator First Bus said it would not have to raise bus fares, as the company negotiated a special price on its diesel across the country.

Operations director for York, Peter Edwards, said: "We are protected from short-term fluctuations in the price because we organise a deal on a national level for a set amount of time.

"We had a fairly substantial fares increase in January because of previous fuel price rises, so we don't need to do the same now."

Hot spots pushing up prices

SO why is the price of fuel so high?

Oil prices hit an all-time record in Britain this week amid mounting fears of a military attack by American on Iran.

Brent crude reached 71.40 dollars a barrel on the London-based ICE Futures exchange while in New York Nymex prices hit exactly seventy dollars for the first time in eight months.

The last time oil prices were this high was after Hurricane Katrina struck the US Gulf coast last September, wreaking havoc on platforms and refineries.

Now, fears of possible disruption of supplies from Iran, the world's fourth-largest oil exporter, have driven prices up by twenty per cent since mid-February. Oil production has also been affected by the political situation in Nigeria, where rebels have shut down a quarter of the country's production.

Updated: 09:38 Wednesday, April 19, 2006