New research briefing on transport fuel prices

PSI has published a new research briefing Road transport fuel prices, demand and tax revenues: impact of fuel duty escalator and price stabiliser.

The briefing aims to provide some objective analysis to inform the current heated debate on fuel prices and fuel duty. It looks at the trends in crude oil and road-fuel prices and demand over the past 20 years in the UK and the revenues generated from fuel duty. It also considers the design, practical implementation and impact of a fuel-price stabiliser.

The retail price of motor fuels has risen steadily over the past two decades. During the 1990s, the rise in the price was driven by increases in fuel duty. Over the past 10 years, the rise has been driven by the increases in the price of crude oil.

Fuel duty raises significant revenues for the exchequer: in 2009-10, fuel duty (and the associated VAT) amounted to £29 billion, around six per cent of total revenue. These revenues allow other taxes to be lower than they would otherwise need to be were fuel duty lower. Fuel duty also results in reduced fuel demand and hence lower carbon dioxide emissions from the transport sector.

Read the report

Road transport fuel prices, demand and tax revenues: impact of fuel duty escalator and price stabiliser [pdf]