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Soaring fuel prices in the UK

Fuel prices in the UK are at the highest they have ever been both for petrol and diesel. With the average price of petrol at 139.1p and diesel 143.2p it's not a wonder that people are struggling to run their cars. But what is making the fuel prices soar so high?

Well, there are a number of different reasons why fuel prices have gone up, some obvious reasons whilst others not as much. An obvious one that you may have already guessed is the VAT increase from 17.5% to 20%. This means that the price of everything has gone up by an extra 2.5%, including fuel which is not good news for drivers. To make matters even worse the price of fuel is expected to soar even higher in the fourth coming months so don't be expecting a sudden price drop anytime within the near future.

Most know about fuel duty, or fuel tax as it's also called, but did you know that the duty was increased on New Year’s Day 2011? This probably slipped under the carpet with most as the Christmas celebrations were still ongoing, however what didn't slip under the carpet was the extra 3.5p per litre you had to pay on your next trip to the fuel station which fuel duty is to blame. 50% of what you pay for fuel is fuel duty, 30% is on the cost of the fuel, 12% on VAT and 8% to the retailer of the fuel. This means the government get a massive 62% of what you pay for fuel; however is this major cause of fuel inflation prices?

The Japan earthquake also affected our fuel prices as the Fukushima Daiichi nuclear plant was damaged which is one of the largest power plants in the world. Some may now be thinking why does a natural disaster on the other side of the world affect our fuel prices? The correlation being that as their production stopped oil and gas prices rose as it was scarcer causing a raise in petrol and diesel all over the world. So it's not just governments fault to why our fuel prices just keep rising is there anyone else to blame you ask?

The office of fair trading (the OFT) are currently investigation into the matter of fuel prices and seeing who is to blame. They want to look at whether the lower crude oil prices are being reflected at the pump to see if the retailers are taking an extra cut or if supermarkets and oil company practices are making it difficult for independent retailers such as Shell and BP to compete by forming an alliance. Other areas they will be looking into are the lack of competition in rural areas and the price co-ordination of road fuel markets in other countries to see if they're relevant in the UK. However an area that won't be investigated is the taxation of fuel, some say that a true investigation into fuel prices can't be done without looking at the fairness of taxation on fuel.

Prices of things fuel related such as driving lessons are on the increase due to the soaring fuel prices. The prices of driving lessons Manchester and other things fuel related won't be able to balance out again until the fuel prices do hence the importance of the OFT investigation.

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