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Oil giant BP has increased its third quarter profit by 148 per cent on the soaring price of crude.

Although the price of oil has halved since July, it is still at historic highs and BP's third-quarter replacement cost profit was $10 billion, compared with $4 billion a year ago.

Oil is currently trading at around $63 a barrel, down significantly from its summer high of $147 a barrel as investors fear the global downturn will reduce demand.

The company said higher prices for gas and oil fuelled the profit rise, although costs were also higher.

Motorists have felt the effect of higher oil prices as petrol has soared beyond a pound a litre and many feel the oil companies are profiteering from the situation.

However, motoring organisation the AA says that wherever demand outstrips supply, a profit will be made.

Spokesperson Andrew Howard said: "We hope that a significant part of these profits are going to either looking into alternative energy sources or exploration, because that is the only way of getting costs down."

Overall, production was up by five per cent over the last three months compared to 2007, despite hurricanes temporarily shutting down operations in the Gulf of Mexico.

The company said it expects to ramp up production further in the fourth quarter, but warned: "The slowing of global economies, exacerbated by the current instability in global financial markets, remains a key risk to our marketing and supply businesses."

BP said it is paying a quarterly dividend of 8.7p per share, compared with 5.3p per share last year – an increase of 43 per cent over the last nine months.