Published: Thursday, 1st May, 2008 3:46pm

Bus fare hike looms as fuel prices rocket

by Lucy Thorne

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BUS passengers are facing potentially painful fare increases if the fuel price crisis continues.

That was the warning yesterday (Wednesday) from James Freeman, chief executive of Reading Buses, which operates services across Berkshire.

Petrol prices yesterday officially went through the £5-a-gallon barrier in a

week when BP and Shell announced record profits - an eye-watering £7.2bn between them.

Mr Freeman said: "It has become very uncomfortable. Every time I go past a petrol station I see a new price I haven't seen before. If fuel prices continue to rise we will have to do something with our fares. We can't sustain that. At this stage we have made no decision but we are looking at it. It is a very uncomfortable climate and we are squeezing everything."

Parent company Reading Transport has a 200-strong fleet, with all but one bus using bio-diesel.

Mr Freeman added: "I have worked in the industry for three decades and I can't remember when diesel prices have risen so much.

"When we make our budgets we always predict fuel prices will increase but this is quite extraordinary."

He pledged that the crisis would have no impact on services but said: "When fuel prices hike like this people are able to see why we may have to raise our fares as it reflects in their everyday lives. In this situation they are more understanding if we do anything to the fares."

Other companies being hit by higher fuel prices are also blaming the credit crunch for difficult trading.

Same-day courier Post Haste serves Reading, London and the Thames Valley region. The company's Reading office has 80 vehicles doing a total of around 100,000 miles a week and using more than one million litres of fuel a year.

Robert Massey, Post Haste director, said: "Fuel itself has an impact but the context of the economy as a whole, as people have less to spend, is having an effect.

"It is a cliche but it is a double whammy - this industry is one of the first to see change as using couriers is one of the things people tighten up on.

"There is a direct relationship between our customers and fuel, when fuel goes up our costs go up. We are able to pass a little bit onto our customers but they are feeling the pinch as well.

"We have absorbed some of the costs."

Three Mile Cross-based Pulleyn Transport provides specialised temperature-controlled services throughout the UK and Europe.

With a 55-strong fleet it is using more than 425,000 litres of diesel a year.

Tony Tollerbey, Pulleyn's finance director, said: "In the past we have purchased the bulk of fuel overseas because it is cheaper than the UK but we are facing a double whammy because of the strength of the Euro against the pound, which has contributed to a greater increase in fuel prices.

"Luckily we are dealing with the higher end of the market and our customers are more sympathetic. We have been able to negotiate new rates but no one likes to see prices go up. But certain parties, who can cut prices a little bit, try and use the increase to their advantage against their competitors.

"We have seen prices rise in the past but nothing of this magnitude."

Mr Tollerbey said industries reliant on fuel will be watching for the Chancellor's decision on fuel duty in October.

He said: "I can't see the Chancellor reducing prices but we would hope that he doesn't increase the duty."

Claire Prosser, policy executive for the Thames Valley Chamber of Commerce Group, said: "The current rise in fuel prices is not just affecting hauliers, couriers and transport companies, but any business of any size which uses the roads, and it is outrageous. We are worried and our staff have noticed the difference.

"We have transport meetings and fuel prices are now a big agenda item. We have also spoken to Reading Buses and they cannot swallow up the costs any longer."

Tell us what you think of the rising petrol prices. What is the most you've paid for petrol in Reading? Are you surprised the bus company may want to increases its fares?

Leave a comment below or email lthorne@berksmedia.co.uk