Why fuel prices are getting higher

If you live in the United Kingdom you will almost certainly be driving less in the near future because it will cost you more to drive than ever before. Petrol prices are rising and will soon be close to £1.20 a litre and there are several reasons for this.

First there is a hidden tax that seems to have escaped general public attention. In December 2008, when Gordon Brown was saving the world’s economy he reduced value added tax from 17.5% to 15% until 31st December 2009. This was supposed to give a massive encouragement to people to go out and buy stuff, even though they were in hock above their ears and the banks of the world were about as stable as a card castle that a five year old had built.

However, for reasons which are completely unclear to me, it was decided by Mr Brown and Mr Darling that tax on petrol and diesel should not be reduced by this amount. I suppose there might be some environmental claim about this, but I find it hard to understand environmental claims in relation to transport from a Government that have made a short bus journeys expensive and a short underground journeys at weekends in London often impossible.

So, to avoid petrol and diesel becoming cheaper as a result of reducing value added tax the government increased fuel duty by 2p per litre. Petrol fuel duty is now 52.35p per litre. A further 3p per litre is due to be added to fuel duty on 1st April.

At the start of this year value added tax reverted to 17.5% but the extra fuel duty on petrol of 2p that was supposed to compensate for the value added tax reduction was not removed. You might have guessed that this would be the case. Of course since December 2008 the price of oil has risen in real terms and looks likely to continue to rise. Further, oil is priced in United States dollars which have increased in value against the pound sterling.

So it is inevitable that petrol has and will cost us all more, and in the present economic circumstances there is no relief in sight. Petrol duty is an easy tax to levy If you complain about it the official answer is that the tax in needed for “the environment” but the tax on petrol and diesel does not help the environment at all; it is not hypothecated.

Higher petrol and diesel prices actually will help the environment but only modestly simply because people will not buy what they cannot afford, no matter what their needs are. The present price of vehicle fuel is not as a result of a carefully constructed environment policy; there is not plenty of good safe and reliable public transport in place as alternatives to getting in your car; fuel prices are high because Government needs taxes to pay some debts incurred as a result of the haphazard economic planning and poor housekeeping that bedevils our economic, environmental and energy policies.

Most people will have no choice but pay the extra tax on the petrol. It is for them a real additional cost.

You can do some things to reduce the extra that you will be paying. First, fill up your tank before the end of the month. Secondly and most importantly drive carefully without harsh acceleration or heavy braking as driving carefully will save fuel. Thirdly do not keep your engine running unnecessarily. It annoys me greatly when I pass vehicles that do this; bus and coach drivers excel at having their engines running belting out great fumes of diesel smoke. Fourthly you may also have to drive less. It is possible to do this.

These are small things and will give you small savings. They will also provide the environment with small benefits, but with your money every penny counts and with the environment every small saving also counts.

4 Responses

  1. Another Stealth tax by this Government, the sooner they are out of power the better in my opinion

  2. “…but I find it hard to understand environmental claims in relation to transport from a Government that have made a short bus journeys expensive and a short underground journeys at weekends in London often impossible.” Surely not environmental concerns that they have in mind, it might be security measures, or something better: to raise extra money from poeple by means of hidden taxes to SAVE some bankers around, huh?

  3. The environmental claim is just the Governments excuse to tax the backsides off us, they have no concern about the environment, just ways of theiving more money from the hard working tax payer

  4. A couple of pence extra is enough to force many small family garge forecourts to close, our dale is now completely devoid of these and many people have to travel at least half that distance plus or minus another 5 in some cases to get filled up, thus making the chancellor that little bit richer.

    Another finding is that all the speed ramps waste energy the constant slowing and accelerating uses up to 15% more fuel depending on the engine size etc, and that doesn’t include the noise, stress levels and damage done both engine and drive train of a said vehicle that constantly bashes itself going over them, this in turn creates more enviornmental damage via the new parts needed to repair things, its a war on the motorist and their pockets for sure.

    I was talking to a commodity expert freind of mine who said as inflation rises, the ten pound gallon might not be too far away.

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