FLEETS are paying tens of thousands of pounds more for their fuel than they were six months ago – prompting renewed calls for UK Chancellor Gordon Brown to reduce fuel duty.
Increases in the cost of crude oil mean higher prices at the pumps – and an estimated £1 billion tax windfall for the Exchequer, which siphons off more than 80% of the price of a gallon.
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Although Mr Brown stepped off the fuel tax esalator last Autumn, fuel costs have risen by 39.7% since the Labour Government came to power in May 1997.
Keith Greenhead, PHH director of fuel, is warning that fleets face more misery in the coming months with the latest increases in the crude oil price – now at a ten year high of more than $30 a barrel – being passed on to motorists: ‘These latest increases will be passed on to the pumps in two months’ time so we will be seeing another couple of pence increase before the end of the summer.
‘These increases mean the chancellor is making windfall VAT gains of around £1 billion a year he has not budgeted for. He should be putting it back by reducing the duty on fuel even if it was only temporarily. In America they wouldn’t stand for it.’
The alternative fuel lobby is pressing fleets hard to ‘make the change’ from petrol and diesel to liquefied petroleum gas as, claim supporters, the price advantage of running on gas gets stronger almost daily as the price of traditional fuels increase.
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By GlobalDataTom Fiddell, director-general of the LPG Association said: ‘The price of gas is 39.9 pence per litre, half that of conventional fuels. The duty on gas was frozen in the last Budget and gas producers are absorbing slight increases in production costs deliberately to avoid price fluctuation. The Government has also treated gas favourably in every budget since 1993. So if fleet managers want to really make an impact on fuel costs the choice is available to them.’
With unleaded petrol rising by an average of 33p a gallon/7.28p a litre and diesel by 40p/8.78p a litre, fuel bills for a fleet of 100 vehicles have soared by £18,513 for unleaded and £22,440 for diesel (based on 18,000 miles a year/32.085mpg). Costs for a fleet of 1,000 vehicles have increased by £185,130 for unleaded and £224,400 for diesel.
A spokesman for BP, which has increased petrol prices by 4p a litre/18.18p a gallon in the last month and has a national average of 83.9p/£3.81 a litre for unleaded, said the increases were due to the cost of crude oil and the fall of the pound against the dollar.
She said: ‘There has been an incredible rise in the cost of the product. Prices are totally dependent on the price of crude and the strength of the pound as crude is dealt with in dollars. The UK is paying the highest price for fuel in Europe but with the tax taken off, which accounts for at least 75% of the cost, prices in the UK are among the cheapest in Europe.’
Shell also blamed its price increases of 2p a litre/9p a gallon on June 6 and a further 1p a litre/4.54p a gallon to the soaring price of crude oil. Increases by Tesco and Sainsbury – which no longer offer the cheapest option for motorists – prompted Shell to make further increases last week of 2p a litre/9p a gallon on petrol and 1p a litre/4.5p a gallon on diesel.
According to PHH figures the average price for unleaded per gallon is £3.76/82.72p a litre and diesel £3.75/82.63p a litre. Six months ago prices were £3.43/75.44p a litre for unleaded and £3.54/77.85p a litre.
Greenhead is urging fleets to support outlets offering the cheapest prices in a bid to keep their cost down. He said: ‘Note the brands and sites that consistently offer best value prices and be sure to support them. This in turn will keep other sites in each locality in check. Fleets will have to pay more but they will pass it on to the consumers so everyone will pay and not just the motorist.’
