2p Duty, Too Little Too Late?

News earlier this week from Alistair Darling, postponing the 2p Litre rise in petrol came as no surprise to many, Gordon Brown and his chancellor have been hinting that this was a possible move for a while.

As expected, the motoring lobby welcomed this with relief but still demanded that the chancellor back down over the plans to raise duty on cars which emit greater levels of pollution.

The Institute for Fiscal Studies insisted that this move would cost the Treasury in excess of £500m. Former chancellor Kenneth Clarke described it as “scandalous” when Yvette Cooper Treasury chief secretary, failed to give an official estimate of the impact on public finances when prompted.

Kate Gibbs, of the Road Haulage Association, said “anything that helped the transport industry was good news" although the postponement of the fuel duty rise represented "quite a small drop in the ocean".

Beyond the increased pressure from continuous rises in fuel and energy costs, hauliers are likely to be struck again with rising urea costs, the primary component of AdBlue.

An article recently published by MarketWatch.Com suggests that despite urea reaching its highest cost ever last month, prices will again rise in late 2008.

This raises the question if early investment into an environmentally friendly fleet promises to bring as many rewards as the government has led us to believe.

The government has made similar proposals with regards to fuel duty at least 11 times since the turn of the century. Fuel prices have more than doubled in the past 12 years, despite duty being 17% lower. The new decision means the road fuel duty rate will remain at a pinch over 50p/litre for at least another six months.

Alistair Darling commented " The Treasury is hoping to see a slowdown in food prices".., but continued "Oil prices are going to remain high for some time yet".