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RMI wants new Government to reveal fuel pricing strategy

The RMI has called for the Government to clarify its position on fuel pricing, which could move to a “fuel stabiliser scheme”.


Both the Conservatives and Liberal Democrats had very different stances on fuel pricing in their manifestos.

The Conservatives stated in their manifesto that they would undertake an industry wide consultation on a “fuel stabiliser' scheme which would reduce fuel duty as global oil costs and currency exchange pressures force up pump prices. The exact mechanics were to be agreed.

The Liberal Democrats stated in their manifesto that they believe that the cost of motoring should provide an incentive to use sustainable public transport where it is available, but that rural motorists shouldn't be unfairly penalised because of poor public transport availability.

They proposed to introduce a rural fuel discount scheme which would allow a reduced rate of duty to be paid in remote rural areas, as is allowed under EU law.

They also proposed a move towards revenue-neutral road-user pricing while abolishing vehicle excise duty (VED) and reducing fuel duty. This was designed to provide an incentive to shift from car to train on journeys where a good public transport alternative exists and rural motorists will save money.

To coincide with this lack of clarity, it is widely believed that the Government will seek to reduce the country’s financial deficit by increasing the level of VAT paid by consumers. If the figure were to rise from 17.5% to, say 20%, this would mean an increase in the average cost of unleaded and diesel per litre by a further 3 pence per litre to an average 124.6ppl for unleaded and 126.2ppl for diesel respectively. As the United Kingdom consumes close to 50 billion litres of fuel annually, this is a substantial additional contribution to the Treasury’s coffers.

Brian Madderson, chairman of RMI Petrol Retailers Association, said: “With pump prices averaging over 121ppl for unleaded and 123ppl for diesel in Q1, we might well see pump prices in the range 125 to 130ppl in the coming months from increasing global prices of crude oil and a weak currency exchange versus the US dollar.

“Coupled with this potential rise in VAT is the lack of clarity surrounding the new Government’s stance on fuel pricing.

“Inevitably, we are going to be paying through the nose for our petrol and diesel, with over 70% going directly to the Treasury but the Government needs to take care that further tax increases do not reduce discretionary demand. Lower fuel volumes could result in a lower overall tax take.”


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