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Petrol And Diesel Price Rises Shock - Will Chancellor Freeze Fuel Duty

25th October 2021

Photograph of Petrol And Diesel Price Rises Shock - Will Chancellor Freeze Fuel Duty

UK petrol prices have hit their highest level on record and could rise further in the coming weeks as the global energy crisis drives oil markets to a three-year high.

The average daily price for a litre reached 142.94p on Sunday, surpassing the all-time record 142.48p reached on 16 April 2012, according to data from the RAC/Experian.

The new price, which was predicted by analysts late last week, is 28p a litre higher than a year ago, when petrol cost about 114.5p. This will add £15 to the cost of filling up a family car with a 55-litre tank, to about £78.61 from £63 last October, piling further financial pressure on households this winter.

Some analysts are predicting possible further rises to reach 150p per litre if the oil price keeps rising as far as $100 dollars a barrel.

Brian Madderson, Chairman of the Petrol Retailers Association (PRA) warned Government about the swift rise in the wholesale price of both petrol and diesel over the last few weeks.

With forecourt stocks low or non-existent, any new stock will be bought at the higher wholesale levels which will see pump prices rising by up to 3ppl. The PRA points out that such rises are not "gouging" or "profiteering" by retailers during the present fuels crisis but entirely the result of global factors converging at the same time.

The price of Brent Crude has risen by over 50% this year and this has been exacerbated by the recent weakening of £sterling versus $US. In just over 12 months, pump prices in the UK have surged by over 25ppl hitting consumer pockets as higher inflation bites.

Oil prices have been driven by major producers including Russia and the OPEC countries reducing output whilst the major global; economies are recovering at a fast rate after the pandemic.

The Petrol Retailers Association (PRA) has written to the Chancellor stating that it would be economically imprudent for the Government to consider raising fuel duty from the present 57.95ppl in the upcoming Autumn Budget.

Brian Madderson, PRA Chairman comments, "With pump prices at an eight year high, any further tax rises would increase the inflationary basket for households, and as a result would lead to pressure on interest rates.

It is a regressive tax which hits poorer families and rural dwellers the hardest as road fuel is an absolute necessity for so many. It could also make Government borrowings more expensive to service and even restrict their financial flexibility as we go forward.

"The global energy markets are in turmoil at present as we all try to recover quickly from the effects of the pandemic on our economies, and the UK is not immune from such pressures.

"It would be inappropriate for our Government to add to this turmoil by raising fuel taxes. The Treasury's own economic modelling based on the Laffer curve suggests that a modest cut would not be out of place."