Petrol prices at pumps are on course to hit 120p a litre by the end of the year, the RAC warned today.

The first of a double whammy for drivers comes on September 1 when prices are set to rise by at least 2.3p per litre following plans for a fuel duty hike. Three months later Chancellor Alistair Darling plans to raise the VAT on fuel back up to 17.5%.

The RAC said prices have gradually risen throughout the year, adding that costs could reach last summer's peak of 120p a litre once more.

According to the Consumer Council, petrol prices across the province are currently at an average of 103.4p.The average supermarket price is 101.9 and the average independent price is 104.6p.

Tesco and Sainsbury’s operate a regional policy where fuel prices depend on the geographical location of the forecourt.

But the RAC's John Franklin said that motorists should prepare to pay even more during the next few months.

"This is not good news for the motorist at all. It is going to be a 2p hit at the beginning of September. There will be a VAT increase December time, and this all comes at a time when petrol prices are steadily creeping up.

The Government needs to rethink these planned increases because escalating petrol prices will hit hard-working families the most during tough economic times."

The latest hikes have been triggered by the escalating cost of crude oil.

Mr Franklin said it is possible prices could go as high as 120p a litre: "The wholesale price of oil has been creeping up. It hasn't reached anywhere near the heights it did last year yet when it was $147 a barrel, it is now between $70 and $80.

But it is going up and that is reflected in the petrol prices. If you look at the graph it has been steadily rising and there doesn't seem to be any signs of it coming back down."

Source: Greenfuel