Robin Pagnamenta, Christine Buckley and Angus Macleod
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Petrol prices are expected to reach more than £1.12 per litre next month as service stations feel the effects of the latest surge in global crude prices.
Amid fears of widespread fuel shortages before a planned strike at Grangemouth, Scotland’s largest oil refinery, the AA said that the cost of filling a 50-litre petrol tank stood yesterday at £54.44, up £7.82 on a year ago.
There is a six-week time lag between global crude prices, which touched historic highs of nearly $120 per barrel this week, and pump prices.
The average price for a litre of petrol was 108.89p yesterday but Andrew Horstead, of the energy con-sultancy Utilyx, predicts that prices will rise by about 3 per cent to an average £1.12 per litre during May.
In six weeks’ time it will cost £140.40 to travel 1,000 miles in a Ford Mondeo, a rise of £12.76; it will cost £210.60 to travel 1,000 miles in a Nissan X-Trail Trek, a rise of £19.13.
Diesel, which stood at £1.19p yesterday, could rise to £1.23p.
Global crude prices slipped slightly yesterday to just below their record highs. They had risen sharply on Tuesday after an attack on pipelines in Nigeria. Global energy supplies are under intense pressure, with Opec, the oil cartel, refusing to raise output.
Records in New York and London have been broken almost daily over the past week amid concerns about a long-term supply crunch. Crucial talks aimed at averting a 48-hour strike early next week at the Grangemouth refinery collapsed last night.
Industry observers said that the plant’s “point of no return” could be reached in the next 24 hours, so were the strike to be called off, there would still be a significant impact on production and the Scottish economy.
This week Saudi officials raised questions about their country’s ability to increase long-term production as much as previously expected.
A few years ago Saudi Arabia said it would be able to lift production to 15 million barrels a day if necessary and to sustain that for decades. But officials, including Ali Naimi, the Oil Minister, now appear to be retreating, saying they are aiming for 12.5 million barrels.
Mr Horstead said the market was being driven higher by continued strong demand from developing countries such as China and India, as well as from the big Western economies, in spite of the economic slowdown.
Speculation on further oil price rises by hedge funds and other investors has forced prices higher. British industry and opposition politicians stepped up their calls yesterday for government action to help businesses.
The Scottish National Party will table an amendment to the Finance Bill on Monday calling for fuel duty to be cut in proportion to the price rises.
The Road Haulage Association says that the industry desperately needs stability and a check on costs. Jack Semple, head of policy, said: “Fuel is accounting for 40 per cent of companies’ operating costs and fundamentally sound businesses face going bust.”
At present, fuel duty makes up more than two thirds of the total cost of petrol, and business and private motorists pay the same. The only concession for business is that it can claim back the 17.5 per cent VAT charge. But repayment can take up to four months.
Hauliers want a more favourable rate for business, condemning the blanket treatment as a “tax on operations”. Geoff Dossetter, of the Freight Transport Association, said: “We want business users of fuel to be taxed differently. At the moment, road transport companies are paying high levels of tax just to operate. You don’t pay high taxes just to turn on a computer.”
Britain charges about 120p per litre of diesel, compared with the European average of about half that. An additional 2p is due to be imposed in October. Most business groups want this plan to be scrapped. The soaring costs are being passed on to business customers by large hauliers, but small independent businesses have less clout to do so.
David Frost, of the British Chambers of Commerce, said: “Every day the price of oil hits a record high, increasing costs for any business dependent on vehicles. The Government must recognise this and at the very least announce it will not be going ahead with the 2p fuel duty rise in October.
“Just repealing that, however, is unlikely to be enough to ease the damage being done to the competi-tiveness of UK firms. If the price continues to soar then the Government should look at reducing fuel taxes.”
A rise in car tax announced in the Budget as a way of cutting carbon emissions will do little to reduce environmental damage, according to figures obtained by the Conservative Party. While the changes to vehicle excise duty will double the revenue collected from motorists to £4 billion, the figures show that CO2 emissions from motoring are expected to drop by less than 1 per cent by 2010.
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The reason we pay £ 1.15 and not £ 0.45 per litre for petrol is that the 70 p difference is tax. An army of 6,000,000 people are living off the backs of the rest of us. In the biological world, they would be called parasites. In our case, they are called government.
Alastair Taylor, London, UK
Why is the average European petrol twenty pence / Litre cheaper than the UK?
Mark, Yorkshire,
I'm in Scotland and paid 106.9 for unleaded this week.
www.petrolprices.com
Fred Sly, Elgin, Morayshire
£1.12 per litre? Let me know where that garage is! Down here in Devon some garages are charging £1.22 per litre already!!
R. Cole, Tavistock, UK
Fuel prices are going up worldwide. Then again, once you compare the UK prices to the rest of the world, they seem pretty crazy. After all, it'd cost about $A130 to fill my car's tank in the UK. In Australia I've been paying $A75-80 (petrol's about $A1.45-1.50 here, diesel in the $A1.60's).
Dean, Geelong, Victoria, Australia
When you check out the "Malaysia My Second Home" programme, pay special attention to the cost of road fuel. And they allow you to import one car each, tax free. Time to hit the Japan car auctions. Think outside the box, guys. Life's too short to put up with a vindictive Socialist-Marxist government
Andrew Milner, Karuizawa, Japan
"It will cost £210.60 to travel 1,000 miles in a Nissan X-Trail Trek ". That would cover a trip from Manchester to Plymouth and back. With 4 passengers, it's peanuts, compared to travelling by train which would be at least double that figure. Global warming? Very funny!
Shirley Bowen, Blackpool, UK
From 2010, the EU plan is to level the fuel tax rates throughout the EU, so Britain will have to reduce the UK tax amount considerably while Spain will have to raise theirs slightly. How will Parliament replace the massive tax income that will be cut from fuel? Expect pay-as-you-go to start.
B J Deller, Marbella, Spain
aren't the Isle of man privy to certain other tax breaks? I was 18 when labour came to power - now i am 28 and i have never been so poor. If they can find 50billion for the banks then - for gods sake, reduce the fuel duty. listen to the electorate.
Jebadia, kingston upon thames, UK
High fuel costs are here to stay. One way of reducing the cost is to get more miles per gallon out of your car. If you treat the accelerator gently and reduce your speed you should see a saving of 10-15% on the cost. Can almost do 70mpg on a long drive on M25 (in a diesel & early in the morning!)
Richard, Maidstone,
If the price of oil doubles, the price of petrol should double too. Luckily, so much of our petrol price is tax that a doubling in the cost of the actual product leads to a much smaller increase in the price.
I'm sure there's a flaw somewhere in that reasoning though...
Jon, Winchester,
The reason oil and petrol are rising so fast is simple. The world is running short. Output from Russia, Mexico, Saudi Arabia, Nigeria are all down. Output from the North Sea peaked years ago. US production peaked in 73. We are facing a permanent and ever deepening energy crisis. Get used to it
Ralph, Cambridge , UK
All those asking for fuel to be increased or to maintain it's current level do realise that high costs of fuel impinge on every aspect of our lives don't they?
Fuel goes up, food goes up. Goods go up. Not so nice now is it? High fuel costs affect us all, even those who don't drive.
Mark Surrey, North Shields,
I not so concerned about the price rise, it is the taxation that this Labour government put on top of the price rise
steve tea, manchester, cheshire
To Angus Macleod, Mike Wade, Robin Pagnamenta,
You say petrol prices to soar to £1.12/ltr. In N. Scotland they soared passed that weeks ago, £1.30+ is the norm up there.
In Aberdeenshire diesel is £1.20/ltr and rising. Prices seem to rise at approximately 1p/day.
Bruce, Westhill, Aberdeenshire
The British and European tax on fuel distorts the price of vegetable oil and consequently distorts food production and prices ...
Am I the only one to notice that the price of vegetable oil, which was 35p/L now closely tracks the price of diesel and that this season every third field is yellow.
Pedro, Stratford,
The cost of fuel in the UK has very little to do with Global Markets. Most of the cost is TAX. The rest of the world is also affected by Global Markets and yet they pay much less for their fuel that we do in the UK.
Judes, Redhill,
Fergus Logan: this government take more than 80p in fuel tax and VAT from every litre of petrol or diesel we put into our cars. Another 'present' from Gordon Brown.
R.M., London, England
At present, fuel duty makes up more than two thirds of the total cost=====enough said stop blaming opec you cowards
saud, riyadh, kingdom of saudi arabia
Maybe the government could do their bit by reducing the amount they take from every litre?
Nobby Clark, Perth,
See the direct correlation here with "real" inflation figures: transport costs more, so food will cost more.
If your primary source of food is from a shop (vast majority of us in the UK), then you are going to feel the pain there equally as much as you are in your daily commute.
Paul Tinker, Henley-on-Thames, UK
A "six week time lag" that the petrol companies will be keen to shorten.
Still, judging by the amount of petrol I see wasted every day by MOST drivers speeding up like a rocket to red lights then braking hard like they are in some kind of action movie, the cost of petrol needs to be 2 Pounds a ltre.
Sean Hamerton, York., England.
The governement has every right to tax people out of their cars, into more efficient ones. The number of people who drive inefficient 4x4's for no reason other than to inflate their egos should pay for their choices with heavily increased fuel prices. Business however should be compensated.
Eleanor, Guildford,
I wonder why the fuel suppliers always get the blame for the extortionate cost of fuel. I filled my car yesterday at a fuel cost of approximately £22 for just under sixty litres. When I paid I was asked for £65. I don't mind paying £22 for fuel, what I do object to is a tax rate of about 200%.
Ray, Clacton,
Tax is by far the greatest cost in a litre/gallon of petrol. The government continues to snatch billions in increased revenue and use increases in the net price of oil. If we wish to control the cost of petrol then it should be relatively simple to adjust the tax, but that won't happen will it?
Alan, Derby, UK
It's already £1.12 here in East Anglia. Fergus the reason our petrol is more expensive is that roughly 80% of it is taxed by the government to make us all green! The fact that it hugely raises the cost of living i.e food and goods being more expensive due to transport seems to be largely ignored.
Liz, Ely, UK
well diesel is 1.24 a litre here in the isle of man 1.18 &1.14 for petrol. so what can you do. just use less
robert christian, castletown, isle of man
Can anyone explain the recent dramatic rise? I wish I was back in the US . And why does our petrol cost so much when it's not imported as far as the US??
fergus Logan, London, UK