ANOTHER WEEK, another set of dire omens and fears for the UK haulage industry. Last week it was the turn of Unite, Britain's largest trade union to warn that unless the government implements an essential users' rebate on diesel tax, small companies will go bust and employees will lose out on wages.

With the industry reeling over the price of diesel and the massive amount of tax commercial users have to pay, Ron Webb, Unite's national secretary for road transport, said: "The government needs to listen to the trade associations. Unless they introduce a method of returning some of the tax to road haulage companies they will simply not be able to continue to operate. Not only will small companies go bust but larger companies are informing us across the bargaining table that unless they see a change soon it will mean lower wages for employees."

Webb pointed out that the UK road haulage companies' problems are exacerbated by the fact that European haulage firms fill up their trucks abroad for cheaper rates and are increasingly coming across to the UK and working British routes.

"Unless the government acts soon we could see a major road haulage protest. Unite simply will not allow our members' wages to be cut without a robust response," he said.

The week also brought confirmation that no relief could be expected on the international oil price. This is now expected to average $101 per barrel this year, according to the US energy department's analytical arm - an upward revision caused by expected global demand growth and low surplus production capacity.

The Energy Information Administration had previously forecast that West Texas Intermediate crude would average $94 per barrel, but crude prices have spiked over the past couple of months, hitting a trading high of $111.80 a barrel as investors hedged against a weakening dollar.

For UK hauliers the picture is an increasingly grim one. The kings of the road appeared to have won themselves a rare but temporary reprieve in the chancellor's "Boring Budget". However, while Alistair Darling's six-month delay in the extra two pence a litre tax on diesel fuel is the result of determined lobbying by the road transport industry, the day of reckoning still looms. It is only in January that prices broke through the $100 mark, and only a few months before that oil cracked $90.

As the cost of crude keeps spiralling upwards the haulage and other fuel-guzzling industries wonder where it will all end. Some believers in "peak oil" theory - those who believe that the transformed supply-demand relationship spells permanently high prices - are predicting $200 a barrel by 2010, Armageddon for the entire economy, let alone the distribution industry.

Certainly, nobody expects prices to stop at $110 for long - the road transport industry's own forecasters expect $115 by mid-summer.

Exactly why this is happening is unclear. The Opec oil-producing cartel insists there is nothing it can do to boost production, the energy companies say they are doing all they can to develop new oil fields in ever-deeper and more difficult waters, and the Jeremiahs say the oil is running out and the level of recoverable reserves bodes ill for the future. According to MP John Hemming, chairman of the government's all-party parliamentary group on peak oil which met in December: "If the government fails to act, the economic, social and environmental consequences are likely to be dire."

A vast swathe of the transport economy is hit by record oil prices. It includes not only obvious victims such as the Freight Transport Association and Road Haulage Association, whose members share 300,000 vehicles between them, but also the Automobile Association and the RAC. Add to them the British Association of Removers (whose profits are already "wafer-thin", according to president Jonathan Hood), the enormous public transport industry, small businesses, supermarkets (roughly 15% of the price of goods on shelves is due to transport costs), farmers (hostages to costs beyond the farm gate), petrol retailers (who lose business as prices rise), airlines and taxi drivers among many others.

Others united against the planned increase in duty include the Confederation of Passenger Transport, British Chambers of Commerce, the Federation of Small Businesses, the Forum of Private Business, the Petrol Retailers' Association - and, of course, the aviation industry.

While airlines leave most of the lobbying on this and other issues to Geneva-based IATA, there is not much they can do either. BA says its fuel bill will jump by £100 million this year.

US airlines are similarly placed. Just when the industry had persuaded Americans to risk flying the Atlantic in the wake of 7/11, it is threatened by an even more powerful force in the form of oil prices. "The world is not the same," veteran airline executive Gordon Bethune, a former chief executive of Continental, said last month. "At $100 oil, the status quo doesn't work." American airlines burn 19 billion gallons of jet fuel a year, so the problem is clear.

HAD the chancellor had gone with the extra two pence a litre in the Budget, as was hinted, a typical 20-vehicle haulage business would have had to make another £30,000 a year.

That would be on top of the extra £30,000 increase in costs from the two pence applied last October, on top of a 20% increase in the price of fuel.

Several hauliers told the Sunday Herald they would have been forced to join the heap of previous oil price casualties and both main transport bodies - the Road Haulage Association and the Freight Transport Association - are fast running out of patience.

"It's barking mad," said FTA director of external affairs Geoff Dossetter. "We've already got the highest diesel taxes in Europe."

In fact, they are about twice as high. UK diesel duties average 50.35p per litre compared with 24.97p in the EU. The European truckers who fuel up before crossing the Channel can generally complete their entire UK run without troubling a diesel pump - infuriating their UK counterparts.

Where once hauliers were merely dazed and confused at successive Budget pummellings, now they are fighting back. The Road Haulage Association took the fight to Holyrood six weeks ago with chief executive Roger King spelling out the doomsday scenario for Scottish hauliers, which is made worse by the prices of fuel in the outer reaches of Scotland. Scots also suffer more because of the need to transport goods across the Border, which pushes up costs per tonne disproportionately high in the first place.

While most industries simply pass on such charges like taxi drivers, or coach operators, this is harder for the Scottish sector because of competition from the south. It is the southern hauliers who set the freight charges and Scottish hauliers who have to live with them.

Extra costs apart, this is already a knife-edge industry. The emaciated state of its margins gives bank managers nightmares, and hauliers find it hard to get loans. According to various sources, average profits are somewhere between 2%-4% after all operating costs - insurance, maintenance and, of course, fuel - are subtracted. "You'd be better off putting the money in the bank," points out Phil Flanders, the blunt-speaking director of the Scottish and Northern Ireland branch of the Road Haulage Association. Fleet owners are seen as the bottom feeders of the reimbursement chain. Under standard contracts, they are required to meet their fuel bill within 14 days but do not get paid themselves for 60 days.

Not surprisingly, the mortality rate in the industry is high. There are no statistics for road transport companies going out of business, but industry insiders say the rate of failures accelerates in direct proportion to every increase in the price of fuel. "You will see closures at the smaller end of the haulage industry," predicts the FTA's Dossetter. Anecdotal evidence suggests that owners of fleets of around 20 lorries, who lack the essential economies of scale, are quietly selling up and getting out before it is too late.

The road transport industry is easy prey for HM Treasury. All goods travel by road at some point, so taxing fuel is nothing if not reliable in revenue terms. If a truck fills up with 50 litres at around £52.50, the government picks up £25.17 in duty and £7.82 in VAT, a total of £32.99 in taxation, roughly two thirds of the cost. The Treasury cannot control the price of oil per barrel but it never says no to an unbudgeted tax hike. Of the average £37,000 it costs each year to tank up a two-litres-to-the-mile 44-tonne truck - the heaviest permitted on UK roads - the government snatches nearly £25,000.

Fuel duties alone do not provide the full story of the industry's contribution to the government's coffers. When excise, registration and other taxes are included, the road transport industry delivers £41 billion a year in revenues. By contrast, shipping contributes £3.2bn a year, less than one tenth of the truckers total.

The fuel-efficient shipping industry is one of the few industries not particularly concerned about rising oil prices, one reason why it is enjoying a boom. Container ships run on an extremely crude and untaxed tanker fuel.

"It's sludge basically," said one source. "The cheapest waste product of the refineries." The net effect of high fuel prices is much more marginal on shipping than on some other transport industries.

Measured another way, the average CD player costs about 50p, a small fraction of total retail cost, to bring all the way from Asia to British ports. Of that 50p, just 15p is down to the cost of fuel.

Such differences weigh more heavily as oil Armageddon closes in on the UK economy, just as worldwide financial fears rise to a pitch. According to government adviser and solar power advocate Jeremy Leggett, oil depletion will "lead to a shock to the global economic system capable of taking us not just into the next recession, but into a depression in the way that the events of 1929 did".

And the upside? The Confederation of Passenger Transport reveals a surge in bus use rising last year by a million to an 11-year high. According to the confederation, the rush to buses is not just the result of rising pump prices but also of the cost and difficulty of parking.

Like many other countries, Britain has been caught flat-footed by $110 a barrel oil and is struggling to catch up with countries like Sweden which have established oil-free aspirations. Although giant public transport firms such a Stagecoach are trialling vehicles that will consume less diesel and run more cheaply, the green revolution in public transport is hardly one stop away. The lifespan of a bus is around 20 years so replacing the British fleet with more environmentally benign vehicles is an expensive long-term proposition, As things stand for the road haulage industry, there is little it can do, short of adopting fuel-conserving techniques. As one operator puts it: "They're at least learning to take the lead out of the boot."