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Last Updated: Friday, 14 December 2007, 12:27 GMT
Fuel price hike - the reasons why

pump price
The symbolic 1-a-litre price tag has been reached

As fuel prices tick well past the 1-a-litre mark, the cost of filling up is back on the national agenda and protests are planned.

The BBC's transport correspondent Tom Symonds takes a fresh look at the politics of the UK's high priced petrol.

In the west London district of Chelsea a petrol station charges 1.28 a litre. In Kent a haulier runs his finger along the ascending line of a price graph. A blog inciting protest gets 4,000 responses.

There are three good reasons behind it all:

  • The price of a barrel of fuel, always quoted in US dollars, has nudged $90 (45) - a massive increase over the last year
  • In October, Chancellor Alistair Darling's 2p increase in petrol and diesel duty took effect - there are more rises planned in the next two years
  • Perhaps most symbolically, the 1-a-litre milestone has been passed with some petrol stations not even equipped with enough digits on their pumps to post the new prices.

It is probably not worth worrying that Britain will see a return of the protests in 2000 that brought the country to a standstill. The main reason it happened back then was that tanker drivers supported the campaign and refused to take their vehicles out.

But it was the potency of the blockade that was its downfall.

'Fuel escalator'

The motoring public said: "Yes, we're worried about fuel prices - but not so much that we support action that stops us driving".

To that, this time you can add "especially not in the week before Christmas".

While a coalition of truckers and farmers blames the Labour government, who is really responsible for Britain's high fuel prices?

It was the Conservative government that started this off with the now infamous Fuel Escalator which saw fuel duty rise by 127% between 1989 and 1997.

fuel queue
The fuel blockades of 2000 are unlikely to reappear

It stopped in 2000 as a result of the fuel blockade, and the duty rises under Labour over the last decade add up to just 25%, less than the rate of inflation.

In the same period oil prices have gone up 270%, and it is this that has had the biggest impact on recent prices.

Yet according to the AA, Britain currently has the highest diesel prices in Europe and the continent's fourth most expensive petrol.

It is haulage companies that are feeling the pain most acutely since it costs around 350 to fill up a 44 tonne juggernaut and they manage about 6 miles to the gallon.

The smaller hauliers, of which Britain has many, are most at risk as they are often unable to pass on the extra cost to their clients and struggle with every price rise.

Green policy

Record prices also fuel the long-running complaint that foreign hauliers have an unfair advantage over Britain's operators.

Protestors says the government had a windfall from the VAT on fuel, as well as North Sea oil receipts, and want ministers to cut the duty.

One solution, favoured by many hauliers, is to allow them to use low-tax "red" diesel, currently only available to farm and factory machinery, but that would lead to a dip in revenue for the government.

The government also raises the climate issue, given that the chancellor's budget announcements on fuel duty now appear under the environment heading.

Research by the transport economist Stephen Glaister at Imperial College suggests raising the price of fuel is a pretty effective way of reducing our consumption.

That doesn't mean we necessarily drive less, it means over time we tend to buy more fuel-efficient cars, which in turn prompts manufacturers to find ways to build greener cars.

The Campaign for Better Transport claims the cost of motoring overall has fallen in real terms over the last decade, while the cost of public transport has risen.

All of which means the government is encouraged to nudge prices up over the next few years. And that means this issue isn't going away.


Your comments:

As the value of the pound against the dollar has risen in recent times and oil is sold in $US, why has this not been relected in the price's at the pumps?
Peter Hancox, Cannock, England

I am seriously thinking about taking the bus to work, or better still looking for a job within walking distance, as I am finding it increasingly difficult to keep my car on the road.
Jan Mitchell, Walsall West Midlands

Anything that encourages us to drive less is good. Less pollution and less cars on the road. I have got my bike out and started cycling to work to save money. For essential trips, we have started getting biodiesel which is now cheaper than the regular kind.
Matt, Hampshire

It's well and good to increase fuel prices and I understand why the government do it, however with public transport costs increasing at a higher rate whilst remaining unreliable, what choice do we have?
Huxley Stewart, Cheltenham, UK



VOTE RESULTS
When will petrol prices force you to give up your car?
Now
 12.08% 
1.50 per litre
 11.29% 
2.00 per litre
 14.85% 
Never
 61.76% 
11858 Votes Cast
Results are indicative and may not reflect public opinion

SEE ALSO
Fuel protest convoy set to roll
14 Dec 07 |  Scotland
Protests planned over fuel costs
11 Dec 07 |  Scotland

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