It looks as though the UK government is having second thoughts about its proposal to increase fuel duty by 2p a litre this autumn. Could it be that this week’s protests by lorry drivers descending on London has brought home the deep concern felt by the industry over these increases? Let’s hope so.
With oil prices at $130 a barrel this is hardly the time to go increasing the burden on the logistics sector. The UK’s Freight Transport Association has been particularly vocal on the proposed duty rise saying that the bulk price of diesel has risen from 76p per litre 12 months ago to 106p per litre today, an increase of 40 per cent.
Surely, with the increase in revenue from North Sea oil, following the recent jump in oil prices, the treasury is in a reasonable position to refrain from pursing the autumn rise in duty.
It’s encouraging to see the UK government getting involved in talks with North Sea oil industry bosses, looking at ways of increasing home production. But this is a global issue that requires a coordinated boost in production from the oil producing nations, a move necessary to meet the great thirst for oil from booming economies such as China . Nothing is going to happen that quickly.
What would help in the short term is an immediate halt to the fuel duty rise and indeed, a fuel tax rebate. The French president, Nicholas Sarkozy, has proposed that European Union countries should suspend VAT on fuel at a certain level. But then trying to get the EU galvanized on this could be a long haul.