Labour profits £1 billion from drivers as fuel prices soar due to Iran war

In the United Kingdom, since the onset of the Iran war on February 28, motorists have faced significant increases in fuel prices, leading to a collective expenditure of an additional £6 billion at the pumps. This surge in prices has resulted in the government collecting an extra £1 billion in VAT, as the 20 percent tax generates more revenue when applied to higher fuel costs. The analysis conducted by the RAC Foundation highlights the financial burden on drivers, particularly those using diesel, who have contributed £4.3 billion more, resulting in £713 million in additional VAT for the Treasury. Petrol drivers have incurred an extra £1.7 billion, contributing £289 million in VAT. The situation has prompted calls for the new Chancellor, John Healey, to reconsider a planned increase in Fuel Duty set for the New Year, which is expected to reverse a 5p per litre cut introduced in 2022 following the Russian invasion of Ukraine. This cut is set to expire on January 1, and there are concerns that the government is prioritizing funding for new Prime Minister Andy Burnham's initiatives over the financial relief of families facing rising living costs. The average petrol price currently stands at 161.46p per litre, while diesel is at 181.84p, making it £15 more expensive to fill a typical family car's petrol tank and £20 more for diesel compared to pre-war prices. The fluctuations in fuel prices have been exacerbated by the conflict, which has disrupted oil supplies through the Strait of Hormuz, a critical passage for global oil transport. Before the war, around 130 ships passed through this waterway daily, but this number has drastically decreased to just eight, significantly impacting oil supply and prices. As of now, Brent crude oil prices are around $90 per barrel, having previously reached $100 last month, reflecting the ongoing volatility in the market.