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Fuel prices rise as people panic buy

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The cost of fuel has already begun to rise just a day after one of the biggest oil refineries announced they were filing for bankruptcy.

The South-East of England was expected to be the worst affected, which has caused motorists in the area to panic buy fuel leaving pumps empty.

The AA has reported that on average diesel rose to 142.32p per litre from 142.21p per litre and petrol has risen to 134.03p per litre from 129.9p per litre. Petrol retailers have argued their rise in costs is not down to the closure of the oil refinery but due to the increasing wholesale cost of fuel.

Fuel costs have been increasing constantly over the last few years resulting in some motorists not being able to afford to run a car. The latest news that the oil refinery will file for bankruptcy could result in further price increases at the pump.

Motoring groups have also warned motorists that the restricted fuel supply will increase the cost as companies know people will panic buy which will inflate costs at the pumps.

The Government warned motorists not to panic buy earlier this week as supply to the South-East of England will be taken care of by other refineries from the UK and abroad. Motorists have, so far, ignored the warnings with queues reported soon after the announcement was made.

Reasoning behind the file for bankruptcy comes down to the owners Petroplus who have failed to reach an agreement with creditors to extend deadlines for loan repayments therefore bankruptcy is their only option.

Since the announcement on Tuesday no fuel supplies have left the refinery but production has still continued with refined fuel being stored on site.

Administrators and revenue and customs have both denied that the supply of fuel is being held up because of the announcement or over concerns that VAT and duty will not be paid on the tankers that leave the site. However they say it is a hiccup in legal terms of administration which is the reason why the refinery has not continued to trade.

Industry experts have predicted that a new record for fuel prices will be made soon with diesel estimated to increase by 3p per litre because of the oil refinery in Croydon coming to a standstill.

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By Amanda Bainbridge