With pump prices set to continue rising, the Chancellor must take swift action in the Budget on March 20 to cancel the proposed duty rise in September and cut this damaging tax which restricts economic recovery and adds to inflation, according to Brian Madderson, chairman of the Petrol Retailers’ Association (PRA).
UK wholesale prices for road fuels continue to defy market logic with petrol up by more than 10.00pence per litre (ppl) since Christmas and diesel up by over 8.00ppl. Yet the national pump price averages have moved slowly to 138.56ppl for petrol and 145.33ppl for diesel (Experian Catalist). Thus leaving another 4 to 5ppl increase to come over the next few weeks as oil traders/speculators are suspected of distorting the market.
“Weakening exchange rates account for a part of the recent increases as does the rise in Brent Crude," said Madderson. "However the majority of the wholesale cost increase is unexplainable. Why did the OFT conclude in their recent findings ‘while these issues (impact of speculation and manipulation of oil spot and futures markets) could potentially raise serious concerns, we have not received any credible evidence to suggest such concerns are arising... and do not propose to carry out any further investigation. Did the OFT expect the oil price manipulators to voluntarily supply evidence?’. The Government urgently needs to address this and other fuel market failures by the OFT when reporting last month on their Call For Information (CFI).
“The bad news for motorists and businesses is that pump prices will continue to increase with the real prospect of new record highs by Easter eclipsing the 142.48ppl for petrol and 147.93ppl for diesel reached in April 2012. The Bank of England Governor, Sir Mervyn King, has advocated depreciation of the Pound to boost exports and the news this week that further Quantitative Easing (QE) could be introduced has had the immediate effect of weakening the Pound. Every 5 cents drop adds another 2ppl to the wholesale price so UK motorists and businesses could be in for a very costly rise in fuel prices by the Spring.
“This will continue to stifle the UK’s economic regeneration, is bad news for inflation and very bad news for households and small businesses reeling from recession and underlines the need for the Chancellor to take decisive action at Budget time”