The head of the Petrol Retailers Association (PRA) is defending his industry by denying that retailers are to blame for the current high cost of petrol and diesel.

“With many fuel retailers barely clearing costs, only the Chancellor of the Exchequer is in a position to permanently reduce the price of fuel at the pump, through a reduction in duty,” says PRA Director Ray Holloway.

Holloway adds that the price of a barrel of oil and the price you pay at the pump are not as closely connected as you might believe. "There is not a direct link. Changes in the price of a barrel of oil do not necessarily affect the price at the pump immediately, and at present this is being further distorted by the falling value of the pound.

“The oil market operates internationally, and is based upon the US dollar. As a result the local impact can vary greatly based upon these and other variables. It is therefore a myth that retail prices always go up with the crude oil price, and fall more slowly.

Cutting fuel tax would mean an immediate reduction in prices for the consumer, and would give forecourt traders a little breathing room. The PRA will continue to push for a reduction in fuel duty, and at the very least the cancellation of the further increase of 2.35p per litre, representing 2p in excise duty plus VAT, planned in the 2008 Budget.”

On the same subject, Geoff Dossetter of the Freight Transport Association has suggested that fuel receipts should show the price of the fuel itself, the fuel duty and the VAT. “With fuel duty at 50.35p per litre and VAT at 17.5% then the cost of a typical fill of 50 litres of fuel at £1.05 per litre works out at £52.50. This consists of £19.51 for the fuel, £25.17 for the fuel duty and £7.82 for the VAT.

So, for 50 litres at the pump, we are paying £19.51 for the fuel plus an eye-watering £32.99 in taxation. And now the Chancellor is looking for a further 2p per litre in April!

Two-thirds of the pump price of diesel and petrol is taxation. The Government should be content with that and scrap its plans for a further increase.”