New rise to put petrol up by 14p per gallon

Click to follow
The Independent Online

Petrol prices - already at an all-time high of nearly £4 a gallon (84p per litre) - are set to rise substantially in a few weeks' time.

Petrol prices - already at an all-time high of nearly £4 a gallon (84p per litre) - are set to rise substantially in a few weeks' time.

Prices have risen three times in the space of a month, and a fourth increase is on its way which will add up to 14p to the cost of a gallon. "Mondeo Man" now pays more than £50 to fill up his vehicle compared with £39 in December 1998 and about £25 a decade ago, according to the AA.

Together with the rise in insurance premiums, the cost of using a petrol-driven car is 8 per cent higher than last year - far outstripping inflation.

Industry experts say the rocketing price of fuel has been caused by dearer crude oil, weaker sterling - which means it takes more pounds to pay for it - and higher taxation.

The Organisation of Petroleum Exporting Countries (Opec) can take much of the blame for the increasing cost. Recently it decided to jack up prices of crude again, andmotorists are expected to start begin footing the bill in August, as increases take two to three months to feed through.

Sainsbury's, which sells6.5 per cent of the petrol on sale in Britain, says crude prices have risen from $23 to more than $31 since March.

Motoring organisations point out that there is another villain of the piece in the form of Gordon Brown, the Chancellor of the Exchequer. In Britain, 84 per cent of the price of petrol is made up of fuel duty and value added tax - far higher than in most other countries. In Ireland, the average price of unleaded petrol is 53p a litre, in Spain it is 52p, Germany 61p and France 69p. The cost in the United States is about 27p.

The Chancellor, a non-driver, was recently exposed over his ignorance of the cost of fuel. Quizzed in the Commons by the Tory MP John Redwood about the cost of a litre of fuel, Mr Brown was unable to answer. His aides argued, however, that it would be even higher if the Chancellor had not abolished the "fuel duty escalator" - a concept which originated at the Kyoto summit on the environment to combat greenhouse gas emissions.

The policy of increasing tax by 6 per cent plus inflation was scrapped and replaced with annual rises in line with the retail price index. However, it has been calculated that for every tanker with a 38,000-litre load worth £31,904, the Treasury creams off £27,438.

The price of petrol also varies considerably throughout Britain. On urban A roads where competition is tough and throughput is high, motorists pay about 82p a litre, according to Keith Greenhead, director of the fuel division at PHH, Britain's biggest fleet car management company. In remote rural areas, however, where small amounts of fuel are sold and delivery costs are high, motorists will be pay about 92p a litre.

Mr Greenhead said there was no reason why the Government could not cut tax on petrol before the next Budget.

Richard Freeman of the AA added: "It would be different if a lot of this money derived from taxation was spent on the transport system so that we had shiny new trains and great bus services. But the truth is we've got abysmal public transport."

Meanwhile Opec is due to meet next week to decide how much more is to be extracted from motorists' pockets.