- Government urged to scrap ‘escalator’ rise on fuel duty
Eye-watering: There will be no let up at the pumps as unleaded is set to hit £1.36 by Easter - and diesel will be £1.40
The record high will come in from April 1 as petrol and diesel prices shoot up by 8p a litre thanks to yet another ‘stealth tax’ and rising oil prices.
This will push the cost of unleaded petrol up to £1.36 a litre (£6.18 a gallon) and diesel up to £1.40 a litre (£6.36 a gallon).
It means the cost of filling a saloon with a 50-litre tank will soar to about £70. Only 12 months ago, when petrol was £1.10 a litre, it would have been £56, marking a rise of 25 per cent.
The gloomy forecast for drivers came as Brent crude oil rose to $98 a barrel on London markets yesterday for the first time in 27 months. Experts said breaking the $100 a barrel threshold is ‘imminent’ amid growing global demand.
Petrol retailers have written to George Osborne urging the Chancellor to abandon the next automatic ‘escalator’ rise in fuel duty in his Budget, which will see up to 5p a litre added to the cost of fuel.
Combined with predicted oil price increases, motorists and hauliers face a total rise of 8p.
AA spokesman Luke Bosdet said: ‘Motorists are punch-drunk with these relentless price rises. They are driven by greedy speculators playing the markets and pushing up the price of oil, and therefore petrol and diesel. The pips are squeaking.’
During Prime Minister’s Questions yesterday David Cameron came under renewed pressure to help cash-strapped motorists by introducing a ‘fuel-stabiliser’ – where duty falls to compensate for oil price rises, keeping petrol prices on a more even keel.
After days of apparent dithering on the issue, Mr Cameron was asked by Tory MP Anne McIntosh at PMQs if he would revisit the fuel-stabiliser idea.
Petrol SOS: Retailers have written to Chancellor George Osborne urging him to scrap a proposed 5p duty rise
Under the stabiliser mechanism, fuel duty would be cut when oil prices rise, and increased when they fell.
The rule of thumb adopted by the oil and petroleum industry is that every $2 rise in the oil price results in a 1p rise in the pump price. So if oil rises by $10, a fuel-stabiliser would mean the Government should cut 5p off the fixed-rate duty it levies at the pumps, which is currently 58.95p a litre.
The Conservatives pledged to consider a ‘fair fuel-stabiliser’ before last year’s election. However the plan was kicked into the long grass until rising petrol prices, including a 1p-a-litre hike in duty and the VAT rise to 20 per cent, led Mr Cameron to revisit the topic last week.
Days later, however, he appeared to backtrack, telling the BBC: ‘I don’t want to raise people’s hopes too far because it is a difficult issue.’
After a series of almost daily increases, unleaded is currently at a record high of £1.28 a litre (£5.82 a gallon). Meanwhile diesel, at £1.32 a litre (over £6 a gallon), is now ‘perilously close’ to the previous record of £1.33 set in July 2008 and will soon surpass it, say retailers.
Hike: An extra 5p per litre will go on petrol in fuel duty - taking the cost of filling a Mondeo to £70
In his letter to the Chancellor, Mr Madderson writes: ‘Our pessimistic outlook is that retail prices are likely to rise by as much as 8p-a-litre by Easter.
‘This would put unleaded petrol at an average of 136p per litre and diesel at an unthinkable 140p per litre. The effect on industry and inflation is self-evident.’
Warning of ‘much more pain in the pipeline’, he said yesterday: ‘It’s time the Chancellor stepped off the fuel tax escalator. The thing about escalators is that when you reach the top, you do get off.’
The Federation of Small Businesses warned that its members were being ‘hard-hit’ ‘at the most fragile of times’ as they struggle in the economic downturn.
And Kate Gibbs, of the Road Haulage Association, called the rise ‘little more than another kick in the teeth’.