This latest increase is due to government plans to raise fuel duty on 1 April. But it hides bigger issues.
The last time prices approached £1.20 per litre was in 2008, following the dramatic increase in wholesale oil prices to $147 per barrel. Oil is now ‘only’ $80 per barrel, yet clearly pump prices have not fallen by a similar 45% in the meantime.
That’s partly because speculators have kept wholesale petrol prices high, with marked increases since late January. Such activity obviously has a direct effect on retail prices.
As expected, motoring groups are urging that the impending fuel duty increase should be delayed or abandoned, in an attempt to soften the impact on drivers.
Members of Parliament are also joining the calls for postponement, with Labour MP Lindsay Hoyle even claiming, ‘Motorists are being legally mugged at the forecourt by petrol companies’.
A nice sentiment, although maybe expressed with the forthcoming general election in mind.
Perhaps Mr Hoyle has also forgotten that the government is a willing accomplice to the mugging, seeing as fuel duty and VAT combined account for over 60% of petrol prices. The last fuel increase in December 2009, and the reversion of VAT to 17.5% on 1 January 2010, certainly helped motorists to empty their wallets a bit quicker, too.
Never has an electric car seemed more appealing.
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