While French rebel, Britons accept high prices

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The Independent Online

As the French manned the barricades yesterday in protest at the high cost of fuel, the British wrung their hands at the prospect of yet another increase in petrol prices.

As the French manned the barricades yesterday in protest at the high cost of fuel, the British wrung their hands at the prospect of yet another increase in petrol prices.

Britons have endured a 10p a gallon increase on the forecourt this week alone and motoring organisations forecast more rises on the way.

The price of a gallon is fast approaching £4 and the Dump the Pump protest group, the nearest Britain comes to militancy on the issue, warns that the £5 gallon will arrive "sooner than people realise".

The group has had limited success stirring the British public into action. Its call for a boycott of the petrol pump on 1 August received a patchy response at best and the second day of "action" was virtually ignored by motorists.

Since then, it has urged drivers to avoid BP garages as a means of concentrating the protest and maximising the impact. BP said the campaign was having no effect. But why do prices keep rising? While the motorists blame the Chancellor, Gordon Brown, one of his Tory predecessors should take some of the flak.

Kenneth Clarke hit upon the idea of the "fuel tax escalator," which raised fuel duty by 6 percentage points above the inflation rate every year. The idea was to persuade motorists to forgo their cars and the extra revenue was to be spent on public transport. The system was introduced at a time when the oil price was relatively low.Mr Brown abandoned the escalator last year, deciding instead that fuel duty should simply keep pace with inflation. But taxation is not the only ingredient in the price of petrol.

The price of crude oil has rocketed from a low of $10 (£6.60) a barrel in December 1998. As a consequence of a decision by the Organisation of Petroleum Exporting Countries (Opec) to limit production, the raw material hit $30 in March for the first time since the Gulf War. Opec argues that speculators with a vested interest in keeping crude prices high have also contributed to the rise.

The upshot has been that petrol prices have risen from 65p a litre a year ago to about 80p now. Within weeks, it could rise to nearly 87p.

What has angered Mr Russell and his supporters is that the level of taxation in Britain is still among the highest in the developed world. And it is within Mr Brown's power to do something about it. For each litre of unleaded petrol retailing at 80p in Britain, motorists pay 62p in tax. In America, the figure is 8.5p a litre and in France where interest groups are taking to the streets, the tax take is 51p.

Jonathan Simpson at the RAC Foundation argues that the Chancellor could cut 2p a litre off duty with a minimal impact on Treasury revenues.

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