The RMI Independent Petrol Retailers Association (“RMI Petrol”), which represents two thirds of the 9,000 petrol forecourt sites in the country, is predicting a minimum of five pence per
litre increase by the end of Q1 2010 with the possibility of a 10ppl price hike by the end of the year. The key drivers of price rises and price risks include:
- The Chancellor announced in his pre budget report on 9 December 2009 that VAT will be increased back to its original rate of 17.5% on 1 January 2010. This rise will equate to an increase of approximately 2.5ppl at current fuel prices.
- On 1 April 2010, the Government is committed to increase fuel Duty in line with inflation along with a 1ppl rise. If we assume zero inflation on 1 April, there will therefore be an increase of 1ppl.
- On 1 April 2010, the Government is also withdrawing its Duty incentive to refiners for the production of biofuel. The resulting Duty increase will therefore be passed on to consumers in the form of a 1ppl rise at the pumps.
- Any new Government will need to raise taxation and the prospect of VAT increasing to 20% has already been mooted by the City. This alone would add a further 2.5ppl to the price of fuel. There is also the possibility of a snap budget post election which could lead to a fuel Duty hike of 2ppl in the autumn.
With all of these Duty and VAT factors considered, this will equate to a 5ppl increase in fuel prices by the beginning of April 2010 with the possibility
of up to a 10ppl rise solely from UK taxation by Q4 2010.
Brian Madderson, chairman of the RMI Independent Petrol Retailers Association, said:
“2009 has been a tough year for consumers and we are now looking at an even tougher year ahead. The predicted 10ppl rise does not take into consideration any increase in the world oil price which is also a possibility and could add another 3 to 5ppl to forecourt inflation. With pump prices averaging 108ppl for Unleaded and 110ppl for Diesel in the lead up to Christmas, we might well see pump prices in the second half of 2010 in the range 120 to 125ppl; setting record highs.
“It is going to be a tough year for both consumers and independent petrol retailers in 2010 and both are really going to feel the squeeze. RMI Petrol will be actively lobbying Government to minimise the tax increases in order to protect the vulnerable rural filling stations and maintain the momentum of any economic recovery.
“Brace yourselves for higher fuel costs ahead.”