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June’s petrol price stability pumped up Chancellor’s takings
Pump price stability in June restored drivers’ petrol demand to a level of normality last seen in the winter of 2011, AA research has uncovered. It gave the Treasury a £25 million fuel duty boost compared to May.
Latest HM Revenue and Customs figures show that, last month, UK drivers bought 1.603 billion litres of petrol, contributing £929 million in fuel duty to the Treasury. This compares with 1.560 billion litres in May, producing £904 million in duty revenue.
Throughout June, the UK’s average price of petrol held at around 134.6p a litre. Yesterday, it averaged 137.11p, following yet another surge in the wholesale price.
Although panic buying, resulting from the threat of a tanker driver’s dispute, had propelled UK petrol demand in April 2012 up to 1.680 billion litres, the last time normal UK petrol sales were above 1.603 billion litres was November 2011 (1.641 billion litres, generating £951 million in fuel duty).
In March this year, the coldest in 50 years and blighted by the third pump price spike in 12 months, the petrol pump price soared to 140.03p a litre and the volume sold crashed to a record low of 1.375 billion litres. Fuel duty receipts were slashed to £797 million.
Two huge 8p to 10p petrol price swings in March and October 2012 sank UK petrol demand to 1.479 billion litres and 1.536 billion litres respectively. The March spike raised the UK average price of petrol to the current all-time record of 142.48p a litre.
Diesel sales, which include commercial demand, grew from 2.258 billion litres in May to 2.331 in June, generating an additional £42 million in fuel duty receipts. This is the highest since last December (2.369 billion litres).
Pump price volatility has wreaked havoc on petrol demand in the UK over the past 18 months. The uncertainty it has created has lost the Government large amounts of tax revenue
Edmund King, president of the AA
“Pump price volatility has wreaked havoc on petrol demand in the UK over the past 18 months. The uncertainty it has created has lost the Government large amounts of tax revenue,” says Edmund King, the AA’s president.
“From the commodity markets to the forecourts, pumping up the cost passes down the chain until it hammers the consumer. Drivers have reacted by cutting back – up to 76% of AA members have cut back on car use, other spending to compensate or both.”
Although the Government has frozen fuel duty for more than two years, the lack of action to try to soften the impact of price volatility through price transparency has cost them. Warning motorists of impending price surges helps them prepare for it while notice of a price fall lets them know that financial pressures are about to ease. Drivers and small businesses kept in the dark respond by buying less fuel, and that hits tax revenue.
Even China, alongside the US, Australia and South East Asia, is now providing its people with fuel price transparency. The British motoring public and small businesses have been let down badly.
(26 July 2013)