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45 comments on Fuel duty and the effect of oil prices on the UK economy

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Chris Vernon on December 7, 2006 - 6:46am Permalink | Subthread | Parent | Comments top
In late 2003, I could buy petrol for 77p/litre. VAT accounted for 13.475p

Now in 2006 petrol is 85p/litre. VAT accounts for 14.875p

The VAT components on those two prices are 11.47p and 12.66p respectively, still a 10% increase though as you say, however that isn't enough to compensate for the below inflation rise in duty. In any event petrol prices should be rising above inflation, seen the price of oil lately? In order for the market to respond rationally to peak oil we need clear price signals. If the price of oil triples and we are still debating whether the retail price of fuel has or hasn't kept in line with inflation we have a problem!
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andytk on December 7, 2006 - 4:59pm Permalink | Subthread | Parent | Comments top
Oops, right you are, schoolboy error there.

Can't believe I did that.

Ironically petrol prices are rising above inflation.

At 77p/litre petrol is 18.4p for the actual petrol, the rest is tax.

At 85p/litre petrol is 25.2p/litre

That works out at 11% per year inflation over the last 3 years on the cost of the actual petrol.

So the huge duty actually acts as an insulator to the product costs.

Oh, the irony....

Andy

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