With jet fuel prices rising, Branson's Virgin Atlantic Airways’ fuel bill has risen by US$300 million for this year alone, and the airline has been forced to raise fuel surcharges for the second time in four months, he said.

Branson now plans to launch a new company called Virgin Oil within four or five months. Branson plans to put US$100 million of his own money into a US$2 billion refinery project and is seeking to attract funding from other airlines and the UK Government, the Times of London reports.

Hurricane Katrina sent oil prices soaring to US$70 a barrel after it shut several US Gulf Coast oil refineries.

"If we don't start now to get more refineries built then fuel prices could literally rocket to US$100-200 (per barrel of oil) and the world economy would come to a grinding halt," Branson said in an interview on financial news network CNBC last night.

No one has built a refinery in the US in the last 29 years. While Americans love their cars, community and environmental groups would oppose a new refinery in most possible locations, and getting a permit could involve years of haggling and paperwork at local, state, and federal levels.

Branson acknowledged he would face opposition but said the fact remained that new refineries were needed.

"Some people will kick and scream, but they may be the same people screaming about the fact they're having to pay enormous prices every time they get into the car," he said.

While the US desperately needs more refinery capacity, Virgin has ruled out North America and is looking at several locations around the world, including Nigeria, the UK and Europe to build the refinery.

But building a refinery to ease high fuel prices won’t bring down Virgin’s airfares any time soon. Branson told The Times that a new refinery would take three to four years to complete, but some analysts are saying any such facility would take at least four or five years to construct.

And one new refinery will make little difference. Branson believed up to 10 new refineries would be needed to keep down oil prices, The Times said.

He also indicated that the Virgin conglomerate was considering plans for an oil exploration business.

“We think there are ways of extracting oil from small fields that the major oil companies do not touch because they are not economical,” he said.