AMERICANS are already paying for war in Iraq. It is costing nearly $330 (£208) per head and has hit them where it hurts them most — at the petrol pump.

Prices have soared above $2 a gallon in New York. It is considered expensive by motorists who were paying about two thirds as much only a year ago.

The surge in energy prices pushed US inflation up 0.3 percentage points in January, the highest rise since April 2002, at a time of soaring deficits, which are projected to run at $300 billion this year and next.

Worse is yet to come. New Pentagon budgeting plans suggest that the price tag on the war and its immediate aftermath could run as high as $95 billion, without reconstruction and occupation costs.

The Pentagon wants Congress to approve some of the funds before they start their Easter break so that US forces do not run into budget difficulties in the middle of any war.

The cost equates to nearly $330 per head of population. It includes about $13 billion of additional costs arising from the fight against terrorism around the globe.

The huge numbers appeared as support for Mr Bush’s economic policies fell into negative territory for the first time, in the latest poll by the Pew Research Center.

Only 43 per cent of Americans gave Mr Bush a positive rating on the economy while 48 per cent said that they disapproved. Mr Bush’s plans for sweeping tax cuts have also failed to win support among voters as candidates line up for their party’s nomination for presidential elections in November 2004. Only 42 per cent endorsed his $670 billion tax-cut plan, while 44 per cent disapproved.

The escalation in the cost of war has alarmed Americans who have watched the value of their savings shrink with the tumbling stock market.

The $95 billion estimate is almost twice that suggested by Donald Rumsfeld, the Secretary of Defence, last month.

It comes much closer to the predictions of President Bush’s former chief economic adviser, Lawrence Lindsay, who was forced to leave in December.Mr Lindsay’s estimates for the conflict’s cost of between $100 billion and $200 billion caused dismay on Capitol Hill.

Now the Bush Administration is having to make spending requests which are estimated to total between $60 billion and $95 billion for the war. That figure could be cut by contributions from US allies.

The costs also depend on how successful US forces are in avoiding bombing the infrastructure. Even more damaging could be any attempt by Saddam to go out with a bang and wreck Iraq’s oil infrastructure. American officials yesterday revealed, however, that Saudi Arabia had agreed to increase its oil output by 1.5 million barrels a day if Iraqi production is interrupted. Iraq currently produces 2.2 million barrels per day.

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