A day after the UK petrol price hit a record high, there is no shortage of questions being asked about how it affects petrol stations and consumers.
Gasoline prices hit a new record in London, with the average price of a 20-litre tank jumping by 3.2 per cent, the highest rate in over three years.
But is this just the beginning?
For petrol stations, the shock has hit particularly hard.
Gasoline prices have skyrocketed in recent years, rising from around £1.60 a litre to around £3.70 in London.
Some stations, including BP’s Shell stations, have closed due to rising prices.
And that’s not even accounting for the rise in retail sales, which have increased by an average of 22 per cent a year since 2010.
What is the problem?
Gasoline is one of the most commonly sold fuel in Britain.
This means that many petrol stations are likely to sell it in excess of their normal levels.
That’s because the UK’s fuel excise tax (FIT) is paid on the amount of fuel a customer consumes.
The government is trying to get a higher level of tax on petrol sales to tackle soaring prices.
Gas prices are a major issue for households, as the price of the fuel rises and consumers pay more to cover the rising costs of living.
Gas prices have increased dramatically in recent months, with a rise of more than 2.5 per cent on January 5, compared with a 5.7 per cent rise the same day a year ago.
Gas stations are currently facing a squeeze from the new fuel excise, which has increased by almost 10 per cent since May 2017.
This has meant they are facing more of a squeeze than ever before.
But, in addition to rising gas prices, petrol sales are now set to rise even further in 2019.
This is because of the Government’s new fuel price rules.
This new price regime, introduced in March 2018, allows the government to raise the fuel excise by 2 per cent every year until 2020, and then gradually reduce it to just 1 per cent.
This will lead to an increase in the price that petrol stations will charge, and the amount that they can charge for petrol.
The result is that, by the end of 2019, gas prices will have risen by an extra 3.3 per cent to reach a record low of just £1 a litne.
What can be done?
The Government is attempting to ease the squeeze on petrol stations.
The price rise was expected to be capped at £1, but the Government has announced that it is going to increase the rise to £1 by 2019.
The Government’s plan is to bring the increase in fuel excise to the average rate for all consumers by 2020, so that they are at a level that they would be paying if they were paying the average tax rate.
This will mean that petrol prices will remain higher than they are today.
However, the Government will not be able to bring in an additional tax to cover this rise, as that will be paid by households.
This means that, until 2019, petrol stations must charge £1 for a 20 litre tank.
If they charge £3 a litres, they will have to charge £2.70 a litree.
The Treasury is also looking at how it can increase the price it pays for petrol by increasing the amount the government is paying for fuel.
However, this is unlikely to be enough to make up for the increased cost of the new rules.
The Department for Energy and Climate Change (DECC) is currently reviewing how to increase fuel excise on the basis of inflation, and this review will be published soon.
However the price hike will continue for some time, and could lead to a further increase in petrol prices.
This could lead petrol prices to increase even further, with petrol prices set to continue rising.
The cost of livingThe cost per litre has risen in recent weeks, and petrol prices have risen faster than inflation.
The average price for a 40-litres tank rose by 2.7 pence a litred on January 1, compared to 2.3 pence on January 4.
This price rise has come on top of the cost of housing.
The cost of a new house rose by just 0.3p a lit, compared in 2021 with 2020, according to Shelter.
This has led some households to buy cheaper housing in order to reduce their fuel bill.
However this is only a temporary solution.
The Government is trying, however, to reduce the cost by allowing landlords to increase rents.
This should help, but is unlikely.
The new fuel tax rules will mean, however in 2019, that households will be able increase their fuel use to meet their fuel costs.
The new fuel rules also allow households to increase their energy consumption to cover their fuel needs.
In addition, the government has announced plans to introduce an energy efficiency scheme to help households reduce energy consumption.
This would be similar to the one introduced in 2020.This