Double dose of petrol price misery on way for motorists

From today, a Government fuel duty rise will put 0.76p on the price of a litre of petrol and diesel.

Drivers will be hit again on Tuesday when the increase in VAT to 20 per cent will mean more price rises on the forecourt.

The AA estimates that the two increases will add about 3.5p to the cost of a litre of petrol and diesel.

Its figures show that at present a litre of petrol costs an average of 123.98p a litre, with diesel at 128.20p a litre. This time last year petrol was at 107.74p a litre and diesel at 109.46p.

The AA has estimated that motorists – even before the two latest increases – are spending almost 10m more a day on petrol than this time a year ago.

The fuel price increase has led to fury across the board, with many organisations calling for the Government to support the nation's 34 billion motorists.

The Conservatives had previously pledged to introduce a fuel duty stabiliser, designed to cut taxes on fuel when oil prices soar. However, this has not happened. Prof Stephen Glaister, Director of the RAC Foundation, said: "It is a bleak midwinter for motorists with already record petrol prices set to rise significantly with the fuel duty and VAT increases. And that won't be the end of it with more increases in fuel duty already scheduled for April.

"Given that each penny increase in fuel duty raises about an extra 500m for the Exchequer, it is easy to see why the Chancellor is tempted to hike rates.

"But if the nation's 34 million motorists are pushed too far they will drive less and the Treasury could actually see their tax take fall. At the election there was much talk about a fuel duty stabiliser. Drivers will rightly be wondering what happened to that idea."

The Freight Transport Association (FTA) said the January 1 fuel duty rise would leave the freight industry "with a 95m hangover".

Simon Chapman, the FTA's chief economist, added: "Diesel is not an optional extra for industry. It is essential to keep shops stocked and businesses supplied with materials.

"Rises in fuel commodity prices have already left operators facing diesel prices 9p per litre higher than a year ago – adding 3,800 per year to the bill of running an articulated truck.

"This latest fuel duty increase, together with those previously introduced this year, will add a further 1,200 per year."

There are also fears growing crude oil prices could hit consumers, as freezing conditions in the US and mainland Europe could raise prices past $100 (64) a barrel.