PETROL prices could reach record levels this year as business leaders warn of the "devastating" effect on the Westcountry economy.

Chancellor Alistair Darling is coming under increasing pressure to use next week's Budget to delay a planned price rise. A 3p increase in petrol duty is due to come into force on April 1.

Criticism has also been targeted at fuel companies – because the price of oil is little more than half what it was at its peak.

MPs claim motorists are being "mugged" on petrol station forecourts.

The AA warned unleaded fuel could soon cost £1.20 a litre or more. Research has found that an average family with two cars is paying £52 a month more to fill up now than a year ago. The average petrol price in the UK is 115.9p for a litre of unleaded and 116.6p for a litre of diesel, according to www.petrolprices.com

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AA president Edmund King said: "The UK is barely out of recession, yet petrol prices threaten to rise to record prices seen during the boom of 2008 – shortly before the collapse into recession.

"If families, drivers on fixed incomes and those on low pay were unable to cope with record prices then, they are even less likely now."

Even if the 3p increase is withdrawn, the price paid by drivers could soon hit 120p a litre – £5.41 a gallon – according to the organisation. This would overtake the previous high of 119.7p in July 2008.

The AA said the price rises were caused by the increase in the price of wholesale gasoline since the end of January.

Tim Jones, chief executive of Devon and Cornwall Business Council, warned the tax rise would be "absolutely the straw that breaks the camel's back".

He said: "The impact on rural economic recovery would be quite devastating. It is a massive increase in fuel costs just at the beginning of the holiday season when we know a lot of people are thinking of staying at home for UK-based holidays."

He was especially critical of the blanket rise in fuel duty, which he said flew in the face of the Government's commitment to "rural proof" policy to prevent the countryside suffering disproportionately from decisions taken in Whitehall.

Car use in the Westcountry is higher than almost any other part of the country.

Last month, a committee of South West Labour MPs warned the region's heavy dependence on cars would become "increasingly problematic" as "oil prices rise and climate change gets worse".

The region must "plan for a future in which car use must be greatly reduced", the MPs said, while admitting public transport in rural areas was "rare or even non-existent".

The Freight Transport Association has warned that the rising price of petrol is "tremendously damaging".

Chris Hunt, of the UK Petrol Industry Association, which represents oil refiners, claimed it was "nonsense" to blame the high price of petrol on oil companies.

"Back in 1974, there were 16 refineries and 20,000 service stations in Britain. There are now eight refineries and 9,000 petrol stations. If we were profiteering, why would all these be shutting down?"