In the light of the continuing rise in oil prices, the Chancellor should make an early announcement extending the present freeze on fuel duty beyond 1 September. A decision to extend the freeze, announced in the March Budget, for a full twelve months, would help the transport industry to mitigate the major problems generated by higher and higher prices for diesel. The Chancellor should abandon plans for any increased revenue from fuel duty after 1 September.

The freeze extension was called for by the National Council of the 12,000 member Freight Transport Association, meeting in London yesterday (25 April).

FTA External Affairs Director Geoff Dossetter said, ‘Diesel is the lifeblood of the transport industry and transport is the lifeblood of the UK economy. If you’ve got it then it’s been on the back of a truck but the cost of running that truck is increasing every day as a consequence of higher oil prices.

‘The Chancellor takes the very highest share of the price of fuel and he must recognise that the increasing cost is a major concern for UK industry, whether giant conglomerates or small businesses. To his credit, he announced a freeze of fuel duty in his Budget and his recent comments suggest that he does appreciate the problems generated by increases in the world price of oil which are outside of his control. However, fuel duty IS within his control and he should signal his support for industry by an early announcement that he will not take more after September.

‘Around a third of the operating costs of a lorry is the cost of fuel. The rising price of fuel has an impact on everything which we eat, drink and otherwise consume and any further increase in fuel duty by the Government raising prices would be an own-goal on the UK economy.’

Some key transport industry statistics make surprising reading:

UK fuel duty on diesel is 47p per litre compared with an average of just 22p per litre for the rest of the EU

Fuel represents over 32 per cent of the total annual cost of running a 40 tonne lorry. By comparison the cost of the driver represents 28 per cent

Fuel consumption by a 40 tonne lorry is approximately 8 miles to the gallon

For every 1p per litre increase in the price of fuel, the annual cost of running a 40 tonne lorry goes up by £419 per year. Every 1p per litre on the price of diesel adds a further £140 million per year to UK industry’s transport bill

The total fuel bill for a single 40 tonne lorry doing 70,000 miles per year is £33,007. One vehicle - £33,007!

The latest bulk diesel price (ex VAT) is 78.83p per litre compared with 73.26p per litre in April 2005 – a rise of almost 8 per cent. By contrast the comparative rate of RPI is 2.4 per cent

Bulk diesel prices reached 79.96p per litre in October 2005 following Hurricane Katrina. That record high seems certain to be exceeded very soon

If the price of bulk diesel fell by 10p per litre, this would save £4,187 from a 40 tonne vehicle’s annual operating cost – a fall of 15p per litre would save £6,281
Source: FTA