Thursday 1 April 2010

New fuel duty pushes petrol price close to record high


The price of petrol and diesel has edged closer to a record high at the pumps following a one-pence rise in fuel duty which came in at midnight.

The motoring body the AA is predicting petrol could hit a record average of 120p a litre before the end of the Easter holidays.

The duty rise comes on top of steady a rise in the wholesale price of fuel, made worse by a weaker pound which makes imported fuel more expensive.

The rise is the first of a three-stage fuel duty increase announced in the Budget by Chancellor Alistair Darling.

Increase

Fuel duty was meant to rise by 3p a litre on 1 April, but Chancellor Alistair Darling decided to phase in the rise instead. There will be further 1p rises in October and January.

The average price of unleaded petrol is currently 117.93p a litre. Diesel is on average 118.51p, according to the AA.

The penny rise will see petrol move closer to the record average high of 119.7p set in July 2008 at which point Diesel also peaked at 133.25p.

“Where we go from here is difficult to say,” the AA’s Andrew Howard told the BBC.

“It depends on how the pound reacts to the general election result in the coming months, and the impact of any tax changes that follow the election.”

A year ago, fuel at the pumps was about 30p a litre cheaper. But it has risen steadily since then.

“The things that have really put the cost of petrol up more recently has been the fact that our currency has been weaker against the dollar, and that’s actually had a bigger impact than the duty itself,” Brendan McLaughlin from price comparison site petrolprices.com said.

“In 2000, the fuel tax was 73.5%. And now, it’s running at about 60%. So tax on fuel, as a percentage, is actually lower at the moment.”

“Oh, and happy April Fools day!” he concluded.

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