Fuel price surge adds to pressure on tax levels

Pressure mounted on the government to freeze fuel duty yesterday after the price of diesel and petrol surged to record levels despite a drop in wholesale costs.

The average UK price of diesel hit 133.3p per litre, its highest since July 2008, while petrol rose to a fresh high of 128.6p per litre, marking "another milestone along a road of misery for drivers", said motoring organisation the AA.

AA president Edmund King called on the government to ditch plans to add another 1p per litre on to the petrol duty in April and consider bringing in a stabiliser to reduce duty when prices soar.

He added that wholesale prices have fallen nearly 5 per cent since late December and said he hoped forecourts would pass on the cost savings to motorists whenever possible.

Drivers are now paying 19.2p more for a litre of diesel than a year ago, adding 9.61 to the cost of filling a typical 50-litre car. Petrol costs 16.39p more than a year ago, adding 8.20 to the cost of a full tank.

Fuel duty now costs 58.95p per litre following a 0.76p increase on 1 January. It also attracts VAT, which rose from 17.5 per cent to 20 per cent on 4 January.

Former Labour chancellor Alistair Darling announced a further 1p rise this April in last year's Budget.

Chancellor George Osborne yesterday indicated he is considering freezing duty.

The government is also looking at introducing a fuel stabiliser, an idea discussed by David Cameron in the run-up to the General Election. But business secretary Vince Cable yesterday said it would be difficult to devise a system that would work.

He also warned: "It is quite likely that we are going to get a nasty period of high fuel prices."