According to Bloomberg news, the severe price spike was caused by a weaker US dollar and investors shifting their money into commodities.

There is concern that the US Government's $700 billion bail out of troubled financial firms will only worsen the budget deficit and weaken the economy.

According to Business Day, light sweet crude for October delivery jumped as much as $US25.45 to $US130 a barrel on the New York Mercantile Exchange before falling back to settle at $US120.92, up $US16.37.

But RACV spokesman David Cumming said the increase was a result of cashed-up American speculators looking for an investment opportunity as the country's economy slides.

"This 24-hour spike in America will have no impact on Australia over the next few weeks," he said.

"It's bizarre, the American economy is in such disarray you just don't know what these speculators are up to."

Mr Cumming said while American crude oil prices had jumped, the Tapis crude price that impacts Australian petrol prices had risen by less than $5 to just under $104 a barrel.

"It looks like the speculators have jumped back into the oil market in America, they've obviously pulled their money out of other commodities and decided that oil is the next thing they can speculate on," he said.

"Now we'll have to wait and see if the rest of the world's crudes move with them, that will take the next couple of days to see if that happens."

If the overall oil market follows America's lead and Tapis crude rises to up to $122 a barrel, Mr Cumming said Australian motorists could expect a boost in bowser prices of between 15 and 17 cents a litre.

But he said it would take up to five weeks for any impact to flow through to Australia.

"You have to buy your shiploads of crude well in advance to make sure your refineries have a constant flow of oil so ... all the crude that is going to flow through to Singapore in the next few weeks has already been pre-purchased at a certain price, a lower price than what the speculators are pushing at the present time," he said.