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Diesel prices Transport industry calls for support

The Freight Transport Association says that bulk diesel prices are not falling in line with the current dramatic reduction in the world price of oil. Despite the slowing world economy, diesel and gas oil remain at a price premium compared to petrol and jet kerosene – indeed the price premium has increased rather than reduced since mid-July when world oil prices started to fall. A year ago there was broad parity between diesel and petrol prices. Today there is a premium of 10 pence per litre for diesel.

FTA's Chief Economist Simon Chapman said, 'Our concern is not about oil company profiteering. The prices paid by operators are in line with world commodity prices for diesel and gas oil. But our frustration is with the UK Government, which although it wrings its hands about UK industry struggling at a time of economic recession, does absolutely nothing about it.

'UK road transport operators, consuming substantial quantities of diesel in the process of delivering the UK economy, are getting the worst of all worlds at the moment when it comes to fuel prices. In addition to the price premium for diesel, sterling has lost value against the US dollar, making UK fuel prices more expensive, and world oil prices are see-sawing wildly, making budgeting and forward buying difficult.

'The Government must recognise that diesel and gas oil are industrial fuels which are essential in the production and distribution of goods and services for industry and the consumer, and should tax them accordingly. Elsewhere in Europe, member states tax diesel at a lower rate than petrol and many have introduced rebates for operators to deal with the worst excesses of fluctuating diesel prices. This is not the case in the UK. Instead we have parity of duty between diesel and petrol, with the diesel duty rate of 50 pence per litre (ppl) double the European average of just 25ppl.

'Yesterday's (22 September) substantial increase in the world price once again demonstrates the volatility of the oil market and the need for the Government to support UK industry.'

Last week FTA met with Treasury minister Angela Eagle in a further call to the Government to take action to decouple fuel duty charged on commercial vehicles from that for cars. The Prime Minister, when Chancellor, undertook to take action on this matter in 2000 but has so far failed to do so despite constant pressure from the road transport industry. Fuel now constitutes up to 40 per cent of the operating costs of a heavy lorry.

The Freight Transport Association represents the transport interests of companies moving goods by road, rail, sea and air. FTA members operate over 220,000 goods vehicles – almost half the UK fleet. In addition they consign over 90 per cent of the freight moved by rail and over 70 per cent of sea and air freight. FTA's website can be found at www.fta.co.uk

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