Fleet News

Fuel price shock ahead

FUEL prices are set to break through the £4 a gallon barrier by 2003 as a result of the rising cost of crude oil and likely increases in fuel taxes. With Chancellor of the Exchequer Gordon Brown's Budget less than four weeks away, speculation is mounting that he will increase fuel prices by around 3p a litre/13p a gallon.

And with crude oil prices increasing to their highest for nine years, there is also an expectation that further similar sized rises could be on the cards - taking fleet fuel costs up by almost a third year-on-year. If the speculation turns into reality, then fleets will face fuel price rises next month similar to those experienced in recent years - around 6p a litre/27p a gallon - which would add about £15,000 to the fuel bill of a fleet operating 100 petrol-engined cars averaging 32 mpg and £12,200 to a similarly sized fleet of diesel-engined cars averaging 39.5mpg, according to PHH Vehicle Management

The price hike will come despite Brown abolishing the annual fuel tax escalator in his Autumn Statement. However, following Brown's abolition, fleets were warned it did not mean that fuel prices would not go up - it was simply that fleets now do not know by how much they will increase. PHH Vehicle Management's director of fuel, Keith Greenhead said: 'Many in the industry welcomed the Chancellor's retreat on the fuel tax escalator. But we said at the time that just because the escalator had been dropped, it didn't mean that we wouldn't see more fuel tax increases.'

It now seems that petrol and diesel price increases following the March 21 Budget could be similar to those in previous years. Greenhead added: 'This increase, together with the 20% prices have already increased over last year, means organisations running and fuelling a fleet could face a rise of nearly 30% in their fuel costs. For any business, this can only be bad news; it's bad news for Britain and we call on the Chancellor to reduce fuel duty to preserve jobs and the competitiveness of British industry.'

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