Only Chancellor can reduce fuel prices say petrol retailers

‘With many fuel retailers barely clearing costs, only the Chancellor of the Exchequer is in a position to permanently reduce the price of fuel at the pump, through a reduction in duty,’ said Ray Holloway, Director of the RMI’s Petrol Retailers Association (PRA), commenting on moves by MPs to force retailers to drop their prices.

According to Holloway, the relationship between the price of a barrel of oil and the price at the pump is not straightforward: ‘There is not a direct link. Changes in the price of a barrel of oil do not necessarily affect the price at the pump immediately, and at present this is being further distorted by the falling value of the pound.

‘The oil market operates internationally, and is based upon the US dollar. As a result the local impact can vary greatly based upon these and other variables. It is therefore a myth that retail prices always go up with the crude oil price, and fall more slowly.’

Holloway believes that a reduction in the fuel duty level would be far more effective: ‘Cutting fuel tax would mean an immediate reduction in prices for the consumer, and would give forecourt traders a little breathing room.’

He adds: ‘The PRA will continue to push for a reduction in fuel duty, and at the very least the cancellation of the further increase of 2.35 pence per litre, representing 2 pence in excise duty plus VAT, planned in the 2008 budget.’