Businesses and consumers in the West Midlands could be in for a tough time as oil prices hit a record high yesterday, pushing up costs for industry.
Oil prices rose to $105 a barrel because of a weak dollar, a drop in supply in the US and trouble in oil-producing South American countries.
And the £16 billion haulage industry in the West Midlands could be one of the worst-affected victims of the price rises, with the sector facing more pressure than at any time in its history.
Industry leaders are now calling on Chancellor Alistair Darling to give business a break by dropping plans to put more tax on petrol in next week's Budget.
Mike Cherry, the West Midlands policy unit chairman for the Federation of Small Businesses, said pump prices had already escalated dramatically in the last few weeks.
"We will be urging the Chancellor to scrap the tax rise. Petrol prices are already having a significant effect on our members because of increased costs that are difficult to pass on.
"And now with the price rises he will be making that money back in VAT anyway. But given the Government's funding black hole I'm not confident there will be a change."
The difficult economic climate means it is hard for companies to pass on increased fuel prices to customers, who will already be feeling the pinch over fuel prices themselves.
And even if companies can pass on the cost, it would contribute to increasing inflation - which the Government had pledged to take control of.
Mike Farmer, the regional director of the Road Haulage Association, said the haulage industry in the West Midlands - worth £16 billion a year - was already hurting from high fuel prices.
And he said further tax rises would pile more pressure on the industry, making it even harder for British drivers to compete with drivers from the continent, where fuel duty is much lower.
A spokesman for Birmingham Chamber of Commerce said it was impossible to calculate the effect increasing fuel prices had on the region's economy.
But it would hurt both businesses and consumers from almost every walk of life he added.
"It's very bad news," he said. "People don't believe prices will go down afterwards. Clearly if you look at fuel prices they are going to have an impact on every part of business.
"They would have no choice but to pass on the cost to the consumer, which would mean more inflation."
The weakening dollar was blamed for oil prices soaring to a new peak of just under $106 a barrel. The new record price came after the US announced a surprise drop in supplies, and oil producing cartel Opec refused to lift production levels.
Travel firms have been particularly badly hit by fuel price increases, with planes becoming more expensive to fly, leading to knock-on costs for customers.
BA said it expects its annual fuel bill to increase by a fifth to £2.5 billion, sending share prices tumbling, despite growing revenue.
Last month it increased its fuel surcharge, adding £10 to a return long-haul flight of less than nine hours to £106.
And motorists are also being hit at the pump, with prices for consumers continuing to rise.
The AA said the average price of petrol across the UK yesterday was 105.7p, with diesel reaching 111.6p. The prices have moved up nearly 2.5p since the start of the year.
It added its voice to calls for the Chancellor to scrap the planned 2p rise in fuel duty when he delivers the Budget next week.