Petrol retailers have urged Boris Johnson’s government to halve VAT on fuel to ease pressure on consumers as prices soar amid Vladimir Putin’s war with Ukraine.
The price of petrol hit a daily record on Wednesday, with motorists paying on average 159.6p a litre at forecourts, up from 158.2p on Tuesday.
Diesel was also at a record high of 167.4p on Wednesday, up from 165.2p on the previous day.
Rising prices are being driven by hikes in the wholesale price of crude oil caused by uncertainty over supplies as the Ukraine conflict enters its third week.
Crude oil prices cooled slightly after the United Arab Emirates, an influential member of OPEC group of major oil-producing countries, said it supported increased production.
But there are fears disruption to supplies in Russia, one of the world largest producers of oil, could send the eye-watering fuel prices higher still.
“As we have witnessed over the past few weeks, a rise in global oil prices will continue to feed through into UK petrol pumps,” Gordon Balmer, executive director of the Petrol Retailers Association (PRA), told The Independent.
“The international situation remains fluid and motorists continue to feel the strain of price increases,” he added. “In response to this, The PRA is urging the government to cut the level of VAT on fuel by 50 per cent to reduce the pressure on consumers.”
UK motorists currently pay a standard rate of 20 per cent VAT on the cost of most fuels.
Earlier this week, the prime minister dodged calls by Labour leader Keir Starmer to further assist families struggling with their bills.
Mr Johnson and Rishi Sunak, the chancellor, have also rejected the opposition’s demands for a windfall tax on oil and gas giants, who saw their profits rocket during the height of the Covid pandemic.
Both say a one-off tax on such companies would deter investment in the UK.
“Yes, he’s absolutely right that we need to meet the long-term impacts of the spike in energy prices and that’s why I will be setting out an energy independence plan for this country in the course of the next few days to ensure that we undo some of the damage of previous decisions taken,” he told Labour leader Keir Starmer.
On Thursday, the Irish government announced it was slashing excise duty – a form of tax on consumers – on fuel following pressure from opposition MPs.
Analysts fear that economic growth could be hit if fuel prices continue to rise.
“Sky-high energy prices for a prolonged period of time, risks of energy rationing, and ultimately a recession are growing by the day,” Livia Gallarati, oil markets analyst at Energy Aspects said.
A government spokesperson said: “The global price of crude oil has increased sharply over the past year, increasing petrol prices in countries across the world. This is a global trend and not just in the UK. But we will do everything we can to mitigate that and to help the people of this country.
“The £12 billion in support that we’ve already announced to help with the cost of living includes a freeze on fuel duty for the twelfth year in a row – the longest sustained freeze in British history.”