Sky high fuel prices are placing an unstainable burden on UK businesses and the government must introduce a temporary reduction in diesel fuel duty to protect the economy, according to one of the UK’s biggest business groups, Logistics UK.
Writing to Rishi Sunak MP, Chancellor of the Exchequer, ahead of the Budget 2022, Elizabeth de Jong, the business group’s Director of Policy, said, “Logistics businesses, which operate on very narrow margins of around 1%, are currently facing significant increases in the price of fuel.
“These additional costs cannot be absorbed by logistics operators and it is unavoidable that much of these cost rises will need to be passed on to end customers as a result. Fuel is the single biggest expense incurred by logistics operators – it accounts for a third of the annual operating cost of an HGV and without it, goods cannot be delivered to their destinations.
“Logistics UK is urging Rishi Sunak MP to cut diesel fuel duty in the next budget. This reduction could be temporary and reviewed in the Autumn Statement, should fuel prices have fallen.”
Crude oil was trading at its highest level for 14 years on 8 March 2022. The cost of crude oil has risen by 12% since the start of the Ukrainian conflict, and 41% since the start of the year, and the price of diesel is 24% higher at the forecourt year on year. Logistics UK estimates that just one penny increase in duty adds around £470 per year to the cost of running one truck.
Motoring bodies now expect to see an easing off from this relentless price climb as crude rates are dropping.
Ahead of the Budget the Petrol Retailers Association has written to the Chancellor of the Exchequer urging the Government to cut fuel duty to reduce the burden of soaring energy costs and fuel prices on consumers and businesses.
In its letter, the PRA explains that rapid increase in the wholesale price of petrol and diesel have had to be passed on to the motorist as executive director Gordon Balmer explained, “Our members have done what they can to alleviate the increases, but the speed of which prices have moved has been unprecedented and has left many forecourt operators with negative fuel margins”.