Despite originally planning for a 3 pence per litre increase in fuel prices to come into effect from April 2018, it seems that Chancellor Philip Hammond is now hinting that fuel duty will be frozen in the next Budget.
However, planned cuts to oil production by the Organization of the Petroleum Exporting Countries (OPEC) could mean that drivers will face higher costs at the pumps, regardless of the hoped-for freeze.
Fuel duty freeze?
The Chancellor has come under intense pressure from senior members of his party over the matter. They believe that a rise in fuel prices would be unfair on motorists who are already struggling due to a significant rise in inflation and spiralling living costs.
There has been no official comment about the rise (or freeze) from the Treasury. If a fuel duty increase was to take place, it would be the first to occur in seven years. Not only would such a rise affect drivers at the pumps, it would also potentially increase inflation even further. This could risk jobs and slow fiscal growth.
It has been calculated that it would cost motorists and freight companies more than £6 billion extra per year in tax if the suggested fuel duty rise was to go ahead. £3.7 billion of this would come from private households, with the rest coming from the haulage industry.
If the Chancellor was to continue increasing fuel duty on an annual basis, as used to be the case, it would end up costing motorists a massive £23 billion between now and the next election (due in 2022).
Economic arguments
The Conservatives’ DUP allies have spoken out to say that they want to see fuel duty cut. They argue that this would support motorists and be far better for the economy, with people able to afford to drive.
Since March 2011, fuel duty has been frozen at 57.95 pence per litre. This has saved motorists around £186 at the pumps per year. In the face of continuously rising living costs, this amount can really help out many families as they work out their finances.
Not only is there an argument against rising fuel duty, discussions are also being held around how all of these motoring taxes are being spent. There are so many motorists on the UK’s roads that congestion and road maintenance are becoming harder to handle. Providing extra funding for local councils could certainly help with this, but where will the cash come from?
Rising fuel costs
Even if the fuel duty freeze does continue (as many hope it will), this doesn’t necessarily mean that the price of fuel won’t go up. This is mostly due to a pledge between OPEC and other producers, which sees them cutting oil output to steady supply and boost prices. That pledge was due to finish in March 2018, but may now be extended to the end of 2018.
With as much as 1.8 million barrels a day being cut to try to stop oversupply, the cost of a barrel of oil has been pushed up to $60. This is being reflected in fuel costs, which makes it more expensive for car owners when they go to fill up their tanks.
As such, if Philip Hammond does decide that raising fuel duty is a good idea, it could be that motorists are hit twice as hard at the pumps. They’ll be paying extra to cover both the tax increase and the heightened cost of a barrel of oil, making a trip to the petrol station a very expensive one indeed.
With so many individuals and businesses relying on their vehicles in order to work, a fuel duty increase could be a very risky move by the government. OPEC is already making it harder for people to use their cars, vans, and lorries. Any further increase in fuel costs could directly impact the economy.
Have you felt the pain of rising fuel costs? Are you already making fewer journeys as a result? Share your experiences by leaving a comment below.
I am on Pension Credit and live in a rural area where having a car is essential, so any rise in fuel prices either for my car or heating my home will hit me hard
Greed greed greed is time it stops the British are all moaners and whining no back bone be like the French
What a stupid answer to a very concerning question..The French way of doing things is Strikes/Blockades going back to the old days…Where it takes 4 people to serve you( one to ask what you want),one to give you a voucher),one to take the voucher off you and the other to actually give you what you want.also rip the voucher up..Come on..I’m waiting for some of these Liberated countries to start selling their oil because they need the revenue to rebuild (That will put the cat among the pigeons)..and ignore OPEC ..The rich holders of oil..Why aren’t the Local Supermarkets doing more for their customers when it comes to prices of fuel in their petrol stations Every little helps!..After all we are shopping there!
They dont care about you or me……they are a business…and we are the cash to be be harvested…once everyone understands this…then something can be done…till then we are all at their mercy to a certain extent….!
British moaners HaHa you don’t know what your talking about! We have put up with a lot from this government . if you don’t like the Brit go home.
since the rise in fuel cost my car spends more time in the garage than being driven. considering I’m disabled I depend on my car so I’m stuck cant get out or afford to drive my car. I think government should start looking after the people and not them selves. due to Brexit the pound has dropped in value and they cannot get the exit deal correct. why not just stay with European union and be stable before bringing this country to its knees and make family’s homeless! I know this is not really to do with the fuel price rise. but it all ads up. think e need a change in who runs this country!
I am on Pension Credit and live in a rural area where having a car is essential, so any rise in fuel prices either for my car or heating my home will hit me hard
Greed greed greed is time it stops the British are all moaners and whining no back bone be like the French
What a stupid answer to a very concerning question..The French way of doing things is Strikes/Blockades going back to the old days…Where it takes 4 people to serve you( one to ask what you want),one to give you a voucher),one to take the voucher off you and the other to actually give you what you want.also rip the voucher up..Come on..I’m waiting for some of these Liberated countries to start selling their oil because they need the revenue to rebuild (That will put the cat among the pigeons)..and ignore OPEC ..The rich holders of oil..Why aren’t the Local Supermarkets doing more for their customers when it comes to prices of fuel in their petrol stations Every little helps!..After all we are shopping there!
They dont care about you or me……they are a business…and we are the cash to be be harvested…once everyone understands this…then something can be done…till then we are all at their mercy to a certain extent….!
British moaners HaHa you don’t know what your talking about! We have put up with a lot from this government . if you don’t like the Brit go home.
since the rise in fuel cost my car spends more time in the garage than being driven. considering I’m disabled I depend on my car so I’m stuck cant get out or afford to drive my car. I think government should start looking after the people and not them selves. due to Brexit the pound has dropped in value and they cannot get the exit deal correct. why not just stay with European union and be stable before bringing this country to its knees and make family’s homeless! I know this is not really to do with the fuel price rise. but it all ads up. think e need a change in who runs this country!