A 20p per litre reduction in fuel duty would slash pump prices by nearly a fifth, says IEA energy analyst

Commenting on record high UK petrol and diesel prices, Andy Mayer, Energy Analyst at free market think tank the Institute of Economic Affairs, said:

"The price of petrol and diesel has risen by nearly 40p per litre (27 per cent) in two years, contributing to inflation in all goods and services of just over 1 per cent, or a fifth of the overall rise this year.

"We haven’t seen prices like this since the financial crisis and, while much of the increase relates to the pandemic recovery, the situation in the Ukraine means it’s likely to get worse before it gets better.   

"The government cannot control world oil prices but it is responsible for over 50 per cent of the pump price in taxes. If the primary purpose of these levies is carbon pricing, fuel duty is already far too high.

"A 20p per litre reduction in fuel duty would cost the Treasury about £35m a day, but would reduce pump prices by nearly a fifth, providing welcome relief on the cost of living for all of us."