Double tax blow to send petrol soaring: Duty and VAT rise add 3.5p to litre of unleaded in a WEEKEND

Drivers face a double whammy as two petrol price rises within days are set to drive up the cost of filling a tank to record heights.

An increase in fuel duty comes into effect today, followed by a rise in VAT to 20 per cent on Tuesday.

The net effect will be to add an average of 3.55p to a litre of unleaded petrol and 3.64p to diesel.

Both tax hikes will heap pain on millions of families already reeling from the soaring costs of living over the past year.
petrol pump

Soaring: Petrol prices will be pushed up more by a duty and VAT hike

Motorists are currently paying out more than £10million a day extra in petrol costs than a year ago, according to the AA.

Once the two rises come into effect, the average price of unleaded petrol will climb to 127.71p a litre, up by 18.4 per cent from 107.74p a year ago.

This means it costs around £21 a month, £255 a year, extra to run a car.

Meanwhile, the average price of a litre of diesel is set to be some 20.4 per cent higher than a year ago. That will take the average litre price to 131.99p which adds around £19 a month, or £228 a year, to bills.

The punishing increases are not only an immediate blow to household budgets, as they are also likely to mean higher prices for food and other goods and services.

A rise in the cost of petrol means the Government and Bank of England target of 2 per cent for inflation has no chance of being met for at least 12 months.

And the Consumer Price Index measure of inflation, which stands at 3.3 per cent, appears likely to climb.

Professor Stephen Glaister, director of the RAC Foundation, said: ‘It is a bleak mid-winter for motorists with already record petrol prices set to rise significantly.

‘And that won’t be the end of it with more increases in fuel duty scheduled for April. Given that each penny increase in fuel duty raises about an extra £500million for the Exchequer, it is easy to see why the Chancellor is tempted to send up rates.

‘But if the nation’s 34million motorists are pushed too far they will drive less and the Treasury could actually see their tax take fall.’

On average we pay almost £900 in petrol taxes annually. A study by the European
Automobile Manufacturers’ Association shows Britain has the highest fuel taxes of
27 European countries. Our tax is also higher than in the U.S., Canada and Australia.

The Freight Transport Association said the fuel duty rise would leave the industry ‘with a £95million hangover’.

Simon Chapman, the FTA’s chief economist, said: ‘Diesel is not an optional extra for industry. It is essential to keep shops stocked and businesses supplied with materials.

‘Rises in fuel commodity prices have already left operators facing diesel prices 9p
per litre higher than a year ago – adding £3,800 per year to the bill of running a truck.

‘This latest fuel duty increase, together with those previously introduced this year, will add a further £1,200 per year.’

Shadow chancellor Alan Johnson said: ‘In the election campaign George Osborne said the Conservatives had no plans to increase VAT.

‘We have been hearing a great deal about the LibDem U-turn on student fees. Well, this is a Tory U-turn, with the handbrake on, and motorists are being made to pay for it.’

Petrol prices hit record high

Motorists are now paying more than £60 for tank of petrol after the cost of fuel reached a record high, the AA said.

The average price is now 121.76p a litre, overtaking the previous record figure of 121.61p reached on May 12 this year.

Average diesel prices are now 125.73p a litre - still short of the July 2008 record of 133.25p.

Petrol is now 11.88p more expensive than it was at the beginning of this year, with motorists having to pay almost £6 more to fill an average tank.

The extra monthly cost of petrol for a two-car family is £25.23, compared with the start of this year.

AA president Edmund King said: "In the past week, we have seen the average price of petrol shoot up 1.7p a litre across the UK and diesel rise 1.61p.

"It comes at a particularly bad time for drivers who have struggled with appalling winter weather and often seen their fuel drain away while stuck in snow-bound traffic jams."

He went on: "Although the wholesale price of petrol has risen sharply in the past fortnight, there is a growing feeling of helplessness among drivers with winter travel disruption and ever-rising fuel costs. If current prices persist, the new year increase in fuel duty and VAT will push petrol prices up to 124p a litre.

"Our only hope is that either oil and fuel markets settle back down or the pound strengthens against the dollar. Until then, it is an even more uncomfortable ride for families trying to keep their cars on the road."

Oil giants deny claims of \'profiteering\' after big freeze sends petrol prices to record high

Petrol prices are set to hit a new record high tomorrow having matched it today, motoring experts have predicted.

Soaring oil and wholesale fuel prices, and alleged 'profiteering' by oil giants and petrol retailers -which they deny - are blamed for the increases.

Prices are likely to rise even higher in the New Year when the VAT rate goes up another 2.5 per cent - to 20 per cent.

The current record price for petrol 121.61p set on 12 May 2010.

But the AA, which has accused oil giants and fuel retailers of 'profiteering' said: 'It is highly likely that UK average petrol prices will set a new record on Friday.

The latest price - from yesterday’s fuel receipts - is 121.56p a litre for petrol and 125.51p for diesel.'

The record price for diesel is 133.25p set on 17 July 2008.

At the beginning of 2010 petrol averaged 109.88p a litre and since then has risen 11.68p a litre.

It means drivers are paying £5.84 to fill their tanks. And the extra monthly cost of petrol for a two-car family is now £24.80.

AA President Edmund King said: 'In the past week, we have seen the average price of petrol shoot up 1.7p a litre across the UK and diesel rise 1.61p.

'It comes at a particularly bad time for drivers who have struggled with appalling winter weather and often seen their fuel drain away while stuck in snow-bound traffic jams.

'Although the wholesale price of petrol has risen sharply in the past fortnight, there is a growing feeling of helplessness among drivers with winter travel disruption and ever-rising fuel costs.

'If current prices persist, the new year increase in fuel duty and VAT will push petrol prices up to 124p a litre.'
Snow-bound: The petrol price increases come after winter weather brought chaos to Britain's roads

Snow-bound: The petrol price increases come after winter weather brought chaos to Britain's roads

He added: 'Our only hope is that either oil and fuel markets settle back down or the pound strengthens against the dollar. Until then, it is an even more uncomfortable ride for families trying to keep their cars on the road.'

Adrian Tink, RAC Motoring Strategist, added: 'It's unbelievable to think that, compared to this time last year, petrol is 13p per per litre more expensive. That's over £7 more every time you fill up an average tank.'

He said: 'You can't get away from the fact that we have seen 5 rises in fuel duty in the past two years - and we're due another one in January plus a VAT rise.

'Who knows what the price will be come January 5th, 2011 - an average of 125p per litre is very feasible.'

Mr Tink said familes were hit hard: 'If the Government is serious about ending the war on motorists then for the large majority of drivers that starts at the petrol pumps.

'January's rise must be cancelled, and the overall issue of the price of petrol in this country needs looking at urgently.'

On the New York Mercantile Exchange crude rose 42 cents, or 0.48 percent, to $88.70 a barrel.

Brian Madderson, chairman of the petrol retailers' trade association RMI Petrol 'strongly refuted' charges of profiteering and blamed the rising wholesale cost of petrol.

He said margins per litre retained by filling stations were down to 3p a litre and retailers were going out of business and closing at the rate of 500 a year

'The wholesale cost of product from the oil companies has increased by as much as 1.5p per litre in the last week,' he remarked.

Retailers were struggling to keep up and pay their own rising fuel bills, he said.
 

Motorists \'stung at the pumps in the big freeze\' as petrol prices soar

Petrol giants were accused of profiteering last night after prices at the pumps soared as temperatures plunged.

Retailers were accused of talking up a ‘fuel crisis’ when only individual filling stations in some areas ran short.

The AA said Britain’s 33million drivers are now being ‘stung at the pumps’ as fuel prices head towards record highs.
Pumped up: Petrol prices have rocketed at the weekend, with retailers blaming a supply shortage on the cold weather

They issued the warning as more Arctic conditions swept in, with freezing fog blanketing much of England and temperatures plunging as low as minus 18C.

At the weekend the average cost of petrol shot up by 0.76p a litre from 120.07p to 120.83. Diesel prices increased 0.54p over the weekend, from 124.18p a litre to 124.72.

AA president Edmund King said: ‘Drivers battled through snow last week, often on untreated roads, to get to work, only to be stung at the pumps this weekend.

‘Wholesale prices may have been going up with oil reaching a new high, but pump prices were already going up a fifth of a penny last week. Consumers want to know: what happened last weekend to cause such a big hike?’

The AA said the UK record high petrol price of 121.61 was achieved on May 12 this year. The record diesel price of 133.25p came on July 17, 2008.

Retailers said their hand was forced by increases in the world oil markets’ price for crude, which increased by 2.13 per cent between Friday morning and yesterday evening.

Brian Madderson, chairman of the petrol retailers’ trade association RMI Petrol said: ‘We strongly refute these allegations from the AA. None of our members have profiteered from the very real fuel shortages seen during the cold spell, indeed many have suffered as customers and fuel struggled to get to petrol forecourts.’

Last night the Met Office said that the cold snap would remain in place for another ten days, with a brief respite this weekend.

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