Fleet News

Fuel rise to cost fleets £100m extra per year

THE fleet industry will be forced to pay the Treasury a massive £100 million extra a year following Gordon Brown's fuel duty hike, imposed yesterday.

The price of a litre of fuel has increased by 1.28 pence per litre (ppl), pushing the price of petrol up to almost 80ppl.

The increase, equivalent to 5.8p a gallon (ppg), when spread across three million company cars averaging 35mpg and travelling 60,000 miles over a three-year operating cycle means an increase of £300 million in fuel costs over the next three years.

The Treasury's move is unlikely to win it any support from the fleet industry in the run-up to a general election, industry commentators say.

Chancellor of the Exchequer Gordon Brown announced the move in this year's Budget but deferred the increase for six months, partly because of the conflict in Iraq.

Fleet and fuel management company Arval PHH said prices at the pump had already risen by an average of 10ppg, or 2ppl, over the past two months.

Danny Clenaghan, managing director of fuel and business mobility at the company, said: 'The rise in fuel duty on petrol and diesel will present an additional burden on the beleaguered British motorist and UK plc. The rise will bring the national average price of fuel to around 77.8ppl for unleaded and 79ppl for diesel, although we are still some way off the 83ppl diesel prices that triggered the September 2000 fuel protests.

'If drivers head for lower-priced sites it can help to mitigate any increase. However, at a time when competitiveness is paramount, the high price of fuel is already harming all British motorists and every company that operates a fleet. Making prices even higher is unlikely to win the Treasury any friends in the run-up to a general election.'

Castle Fuel Cards is warning fleets that they now need to plan for above-inflation increases in the price of diesel and petrol over the coming months.

Teresa Maynard, a spokeswoman for the Bicester-based company, said: 'The tax rise is proving controversial but should have been anticipated by fleets, since it was clearly flagged by Gordon Brown last April. More worrying from a fleet perspective is the fact fuel prices are already rising faster than inflation.'

She added: 'As well as the forthcoming tax increase, diesel prices are likely to be pushed up towards the end of the year by higher demand for heating oil, which comes from the same 'part of the barrel'.

'The onset of winter is always a good time for fleets to check that they are keeping a close watch on fuel costs but it is even more important this year, since there is likely to be another significant rise in pump prices in the Budget next year.'

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