RAC calls for further cut in duty as fuel prices continue rise to record levels

Fuel prices have continued to break records over the bank holiday, according to the latest Experian Catalist figures, prompting calls by the RAC for a further cut in fuel duty. 

The latest average unleaded pump prices stand at 177.8ppl and diesel at 185.01.Things don’t look like they will get better any time soon, with the price of Brent crude having risen past $124 a barrel last week following the announcement by the European Union that it would slash 90% of its Russian oil imports by the end of this year.

The RAC reported that the average price of petrol had increased by 11ppl in May, the second largest monthly increase ever seen. A litre of unleaded rose from 162.87ppl at the start of May to 174.02ppl by the close. This was less than a penny short of the all-time biggest rise recorded in March when a litre of petrol jumped by 11.61ppl (151.67ppl to 163.28ppl).

Again this was prompted by the rise in oil prices - from $106.07 to $124.45 by the end of May, a 17% increase, which combined with a weaker pound, contrived to push fuel prices to record levels. 

RAC fuel spokesman Simon Williams said: “May has proved to be another horrible month for drivers with the average price of petrol shooting up by 11ppl. This is the second biggest monthly increase on record and comes despite the 5ppl cut in duty.

“Since Russia invaded Ukraine on 24 February the price petrol has gone up 24ppl. For diesel the figure is 30ppl. This means the cost of filling a 55-litre petrol car has gone up by £13, and a diesel one by £16.50. Both of these figures would have been even higher had the Government not cut fuel duty.

“While it’s hard to imagine prices getting much worse, the wholesale price of petrol has now gone above diesel which spells yet more bad news at the pumps in the coming weeks.

“With drivers facing such a dire situation on the forecourts we badly need further intervention from the Chancellor as households and businesses surely can’t take much more financial pain in conjunction with the horrendous hikes in gas and electricity.”

Williams stressed that something needs to be done - whether that’s a further cut in duty from the current 53ppl charged on every litre bought at the pumps, or a reduction in VAT from 20%: ”Arguably, a duty cut would make a bigger difference to both businesses and individuals, but it also seems very unfair that the Treasury is benefitting to the tune of 30ppl in VAT revenue from the record high prices – as it’s effectively a tax on a tax, applied on top of the wholesale fuel cost, duty, delivery and retailer margin. The challenges drivers are facing, a VAT cut would be instant and wouldn’t be swallowed up by fluctuations on the wholesale market.”

Of the weekend rises he said: “With oil above $120 a barrel and sterling still at $1.2, worse is still to come. Sadly, we expect to see the average price of petrol break through the 180ppl mark this week with diesel moving further towards 190ppl.

“More radical government intervention is urgently needed, whether that’s in the form of a further reduction in fuel duty or a VAT cut. As it is, drivers surely won’t be able to cope unless something is done to help. This is fast becoming a national crisis for the country’s 32m car drivers as well as countless businesses.”

Petrol           Diesel