AA calls for action on fuel price rise ‘rip-off ’

MINISTERS must intervene to prevent “rip-off ” petrol prices before the Easter getaway, the AA has said.

The cost of petrol is already the highest it has been for six months, averaging £1.23 per litre, but some stations are charging as much as £1.45, with diesel costing £1.54.

Worse still, the RAC has warned that the average petrol price is likely to rise by another 3p per litre before the Easter and May bank holidays.

“The difference between £1.25 and £1.45 means a tank of fuel costs £10 more,” said Luke Bosdet, fuel price spokesman for the AA. “If that’s not a rip-off, I don’t know what is.

“Retailers know very well that over Easter they will get a bump in customers, but they are not sparing holidaymakers from extra costs at all.”

Mr Bosdet called on Chris Grayling, the Transport Secretary, to act. “The Government has failed to introduce price transparency and as a result, the margins have increased, yet the first that motorists know about it is when they pull onto the forecourt,” he said.

Simon Williams, fuel spokesman for the RAC, said: “With oil at $70 (£54) a barrel and a weak pound, we are very likely to see an average rise in the price of petrol of 3p per litre over the next two weeks. Of course, this is the average, so some retailers may go higher.”

Yesterday, at the BP stations in Winchester on the M3, and Northampton on the M1, unleaded petrol cost £1.45.

Customers in Winchester called the prices “extortionate”. Keith Readings, a retail manager who was driving to Suffolk, said: “You come to expect that on a motorway it’s going to be a bit more, but this is really very high.

“I plan to only put £20 in – enough to get me somewhere I can pay a sensible amount to fill up.”

A spokesman for BP said: “There are around 1,200 BP retail sites across the UK. BP owns and operates around 300 of these, at which we set the fuel prices. At the other sites, the dealers who operate the sites set the prices.

“Fuel prices can be affected by local competition, global oil and oil product prices, exchange rate variations and other factors … motorway service sites are more expensive to operate.”

The AA has called for electronic signs on motorways displaying the fuel prices of nearby stations, while MPS from a cross-party group for fair fuel want the Government to create an independent fuel price watchdog.

Few issues have greater capacity to mobilise popular discontent than fuel prices. They often become the focus for wider disgruntlement, as in France, where the gilets jaunes movement sprang from a tax increase intended to underpin environmental reforms (subsequently scrapped). Here in the UK, the fuel protests during Tony Blair’s first government almost 20 years ago remain a seminal political moment, when a direct challenge was thrown down by voters feeling the pinch. Subsequent governments have been anxious to avoid direct blame for price rises and have largely frozen duties to ameliorate the higher costs of oil.

After a period of relatively cheap oil, the price of a barrel is on the rise again and, with the pound weak, the higher prices are being passed on by retailers, not least to take advantage of the Easter getaway. The cost of petrol is higher than at any time for six months, averaging £1.23 a litre. In parts of southern England, a litre of diesel costs more than £1.50.

Diesel car drivers are especially hard hit by extra taxes to reflect the higher pollution associated with the fuel. Having been encouraged to buy diesel-powered vehicles because they are more efficient and were said to be better for the environment, motorists now find they are paying much more. Some councils charge diesel owners more to park and Sadiq Khan, London’s mayor, has this month imposed an additional tax.

This combination of pump price rises and environmental taxes has a significant impact on household budgets and the profit margins of those who make their living from motor transport. Just as ministers were hoping to see real wage rises feeding into greater confidence after post-crash austerity, rising fuel prices could have a negative impact on growth and any sense of national wellbeing.

In recent years, successive Chancellors have frozen fuel taxes, which would otherwise have risen annually on the so-called “escalator” regime. But it is possible to cut the duty, not just freeze it. The Treasury is reluctant to do so because it provides about £30 billion annually along with VAT.

But the greater efficiency of modern engines means the take per vehicle is declining alongside the falling revenues from VED and the expansion of electric vehicles. Instead of waiting for the inevitable protests, governments will need to think seriously about whether the current tax system can continue or if it should be replaced with road pricing or tolls.