Just as fuel duty went up by 0.76p a litre on the 1st January 2011 the VAT rate rise from 17.5% to 20% quickly followed on 4th January. This coupled with an oil spill from the Trans-Alaska Pipeline System (TAPS), which caused a spike in the price of crude has seen the price of fuel in the UK climb, with some saying it could hit £6 a gallon (£1.32p a litre).


The fuel price monitoring website petrolprices.com monitors about 11,000 garages in the UK and puts the average price per litre at 127.8p. But says that there are four forecourts in the country where fuel is at £1.40p per litre for unleaded.

TAPS carries about 15% of America's oil and is owned by the Alyeska Pipeline Service Company whose major shareholders are BP, ConocoPhillips Transportation and Exxon Mobil. The company says there is no environmental threat from the leak. But the market fall out was a leap of 2.3% in the price of Brent crude to $95.46p a barrel (159 litres / 42 US gallons / 35 imperial gallons).

This will all place upward pressure on the price at the nozzle and, with no sign of respite from government quarters, it looks like more pain at the pumps for average Joe. Not to mention the knock on increases in prices for food etc.

As a result we have the spectre of a re-run of the fuel protests the nation suffered from in 2000. Maybe worse.

Tough times ahead for the government. To press ahead with the green agenda at the cost of the economy, or put the recovery first?

The fuel price stabilising plan the government talked about before getting into office is a way of altering tax levels as the price of crude changed, so shielding the consumer from speculators as well as the true price of oil. But of course all that would happen is that the price of crude would go up and the tax would come down so the speculators and suppliers would get rich as the Treasury suffered. And it would be administratively cumbersome.

The truth is that the government are in a corner. They have green agenda and credentials to push and protect but want to keep the people happy. That was always a rock and a hard place between which some government would, in the end, always come to be trapped. But it is also made doubly worse with the fact that, at this present time, the government needs every penny of revenue it can get.

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