Sky-high petrol prices trigger 14% drop in fuel sales

As a nation we're buying less and less fuel, as we wean ourselves off the expensive commodity in response to exploding prices.

A recent report from the AA said the amount of fuel sold in the UK has crashed 14% since 2007 – or nearly 3.2 billion litres a year. Fuel consumption dropped 2.2% in the last three months of 2010 alone. The average petrol price has soared from 95p a litre in 2007 to 133.04p now.

AA president Edmund King said: “The reality is many poorer motorists can’t afford to pay for petrol and are increasingly leaving their cars idle.”

CRISIS

Some MP’s and pressure groups are urging drastic action as the problem of rising fuel prices becomes "a crisis".

The government has responded to the pressure in last week’s budget, by reducing fuel duty by 1p per litre and introducing a ‘Fair Fuel Stabiliser’ to cut fuel duty when oil prices rise and vice versa.

The Prime Minister says moves to cut petrol tax and scrap fuel duty escalator were 'good, helpful steps' to help UK consumers – amounting to a 6p per litre cut at the pump. "It's a very substantial reduction ... but I think it's absolutely the right move to take." the Prime Minister said.

MOTORISTS NOT CONVINCED

But with price rises forecast to continue, motorists aren’t convinced that the situation has improved, and Labour attacked the fuel duty cut as "Del Boy economics" on the grounds that there has been a recent 3p increase in VAT.

There were also concerns that oil companies might try to recoup the £2bn they are having to pay in extra tax by putting prices up at the pumps – but the chancellor George Osborne said that they would be watching oil companies "like a hawk" to make sure there was "no funny business".



ALTERNATIVES

The rising fuel prices also make food and heating more expensive, so the gloom is set to continue and motorists will need to cut back in other areas to accommodate the price rises. One area where instant savings can be made is by getting a cheaper car insurance quote.
 


Motorists are being urged to cut down on unnecessary journeys to reduce emissions, and any action the government has taken to reduce fuel duty has been balanced by environmental concerns. Environmentalists say the government should be looking at the challenges of climate change as well as rising fuel prices. 

Richard Dyer, from Friends of the Earth, said this must include greener cars, better public transport, encouraging walking and cycling for shorter journeys - and "standing firm on plans to increase fuel duty". Should the government be doing more to reduce fuel prices, or should we be doing more to reduce our consumption of oil?