Despite announcing a record profit of £9.3 billion last week, oil giant Shell maintains pre-tax petrol prices in the UK are still among the lowest in Europe.

Fuel company bosses claim there is as little as a five pence margin in every litre of petrol sold in this country, from which they pay delivery costs, forecourt running costs and staff wages.

But as motorists continue to feel the pinch every time they drive to the pumps, the question on everyone's lips is - why is fuel so expensive?

Despite the on-going supermarket price war, which was kick-started once again last month when supermarket chain Asda dropped three pence per litre off the price of unleaded, the cost of fuel here is still higher than almost anywhere else in Europe.

It is certainly higher than the United States, which serves up the cheapest fuel in the developed world.

Rural parts of the UK fare even worse, as the fuel manufacturers readily admit to installing a higher price at these petrol stations to reflect the inflated cost and extra difficulty in supplying fuel.

Petrol in the Orkneys, for example, is the most expensive in Europe, despite the fact that Scotland processes much of Europe's oil reserves.

A Shell report on rural fuel prices states there is no good news to come for motorists in less populated areas as profit margins fall to historically low levels, forcing rural petrol stations to charge more than their urban counterparts to survive.

But Shell's record profit of £1 million per hour last year was not helped along by motorists in the UK, it would seem.

While the company's production profits remained stable, it was sales to the refined industry, boosted by the lack of capacity in the market, that has caused profits to almost double.

Fuel is supplied to the UK cheaply compared to other countries in the EU as the oil companies attempt to offset the fact that UK motorists are taxed more heavily on petrol and diesel than anywhere else in the world.

The average pre-tax price for unleaded throughout 2004 stood at 21.6 pence per litre and 22.84 pence per litre for diesel.

In comparison, Belgium paid 26.3 pence per litre, while Italy and France paid 25.9 and 22.7 pence per litre respectively.

But while experts predict the price of oil will continue to rise because of the limited resources and high demand, Shell's Jeroen van der Veer, chairman of the committee of managing directors, is certain long-term investment will ensure growth remains stable.

He said in a speech on meeting long term energy needs in a challenging market: "The energy industry has always had to take the long view.

"Long-term investments and long-term deals are at the heart of what we do. And governments and policy makers, who tend to be driven by the short term, will increasingly need to recognise that if they don't create the environment for long-term energy investment then future prices will be high."