Relief From Rising Fuel Prices

Mar 25 2011

Cash-strapped consumers with cheap car loans received some relief from Chancellor George Osborne on Wednesday when he announced that fuel duties will be reduced and that a proposed increase next week has been postponed.

 

The bad news is that the reduction will only amount to 1p per litre, which takes effect immediately. However, he also decided to scrap the fuel-price escalator proposed by the previous Government.

 

This means that fuel duties will no longer go up by 1p plus the rate of inflation in a week's time. He didn't abolish the inflation element though, but postponed its implementation to the first of January next year. The duty will therefore increase by about 3p a litre in January 2012.

 

If Mr Osborne didn't announce these measures, consumers with cheap car loans would have had to pay about 5p per litre of fuel more from the beginning of April.

 

Osborne said "In the past six months, the cost of filling up a family car such as a Ford Focus has increased by £10,"

 

He went on to highlight the reasons for the increase in the oil price from $100 per barrel at the start of 2011 to nearly $120 now. According to him the unrest in the East is largely to be blamed.

 

Some economists fear that the oil price might increase to as much as $200 per barrel within the foreseeable future. This will not only be a disaster for motorists with cheap car loans, but it will also seriously harm the chances of any significant recovery in the economy.

 

Author: Louise Hutchinson

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