February 27, 2013
This week the Road Haulage Association weekly fuel survey found that we’re now only a single penny away from the all-time record high price for diesel. This will come as no surprise to many of us. The spiralling cost of fuel is an ever-increasing pressure on businesses that rely on vans and trucks. When we’re already feeling the effects of the downturn on profits, these fuel costs are further undermining our margins and could be the straw the finally breaks many businesses.
But in the light of the loss of the UK’s AAA credit rating, it seems it’s only going to get worse for the motorist. The loss has seen Sterling reach a two-and-a-half-year low against the dollar. Great news for exporters, not such great news for motorists – since crude oil and its refined products (such as petrol and diesel) are traded in dollars, it means fuel becomes more expensive for British consumers when the pound falls.
And, despite a recent dip by a couple of cents, this year we‘ve seen the price of Brent Crude continue to rise. Worryingly the latest price rises in crude have yet to filter its way through to the pump. But while the price of crude is often cited as the reason for the high prices, we shouldn’t forget the staggering fact that nearly 60% of what we pay at the pump goes straight into the Chancellor’s coffers.
So it’s no surprise that, once again, motoring groups are having to call for the scrapping of September’s planned fuel duty rise. A rise that could critically damage the UK economy as we teeter on the brink of an unprecedented triple-dip recession. And with another budget looming large on the horizon the Chancellor’s collar will undoubtedly be tightening in much the same way he thinks UK business’ belts should be.
The government, struggling with the deficit and facing a £500m hole from VED receipts, will argue that it hasn’t raised duty for 2 years and, in fact, cut duty by a penny in March 2011. But those words alone will not undo the real and on-going damage the high price of fuel is having on British business.