Government under pressure over fuel price rises

1.45pm BST update


* Allegra Stratton
* guardian.co.uk,
* Thursday May 22 2008

The government today came under renewed pressure to take action over the cost of fuel as the average price of a litre of unleaded petrol reached 113.67p.

The Automobile Association compared the price increase to that seen in the aftermath of Hurricane Katrina, saying it would mean Britain's drivers paying £110m more this bank holiday than last year.

Motorists driving diesel vehicles had already experienced their highest month on month increase this century, the organisation said.

Its price report showed that this month's cost rise had been the second highest since 2000 - £3.38 to the cost of filling a typical 50-litre diesel fuel tank – with much of the increase coming in the past 10 days following an 11% rise in wholesale prices.

"The price rises in recent days were of a magnitude only exceeded in the aftermath of Hurricane Katrina, when the price of petrol rose almost 3.5 pence in a week," Edmund King, the AA president, said.

"With many UK families embarking on their holidays next week, the timing could hardly be worse."

Lindsay Hoyle, the Labour MP for Chorley, called on the government to abandon the method by which fuel prices are raised in line with inflation.

The call comes prior to an October decision on whether to raise fuel duty by 2p.

Hoyle told the BBC's World at One programme that "people want to see the fuel duty escalator completely abandoned".

"Rather than wait until the autumn, we need to tell people that it will be abandoned now," he added, calling on the government to toughen up on the profits made by oil companies.

Chris Hunter, of the road hauliers' lobby group Transaction 2007, said it had written to the government demanding help for hauliers, some of whom had been forced out of business by increased prices.

"We want some kind of rebate. A large amount of fuel prices is actually excise duty going to the government," he added. "We want some of that paid back."

Transaction 2007 will hold a protest in central London next week.

Stewart Hosie, the MP for Dundee East, also urged the government to reconsider its stance on fuel pricing.

Hosie said that in Benbecula, on the western isles of the Outer Hebrides, the cost of diesel had reached £1.42 a litre and petrol £1.26.

He added that he would be seeking to introduce an amendment to the finance bill currently going through parliament, proposing the creation of an independent fuel duty regulator allowing higher oil prices to trigger lower fuel duties.

"There is a question as to whether the fuel measures in this year's budget, including the measure that fuel duty will rise 0.5p per litre above inflation annually from 2010 - are now appropriate," he added.

"Right now, people are needing help. If the barrel price continues to rise, the government would be extremely foolish indeed not to consider postponing further October's 2p rise in fuel duty."

The Conservatives said they were "looking closely at the fuel tax issue" but it was "too early to say if the 2p increase in fuel duty should be delayed – we don't know what the oil price will be in October".

London remains the most expensive region in which to buy petrol, 1.7p more expensive than the cheapest, Yorkshire and Humberside.

The AA said the Grangemouth dispute and the panic buying associated with it had little effect on the average price of petrol in Scotland, although diesel was at least a penny more costly than in northern English regions.