So fuel price increase is nothing to do with tax?

When the Prime Minister and the Chancellor flew to Aberdeen to meet with the bosses of the UK oil industry, Gordon Brown tried to deflect attention from high fuel taxes as the cause for the current fuel price crisis. Instead, he tried to focus attention on fuel supply as the real cause.

When more than two thirds of the price of every gallon of road fuel is tax (fuel tax and VAT), that is a particularly difficult assertion to accept. According to recent media coverage, the Government stands to make an additional £4 billion in tax as a result of the price increases.

With the UK being one of the highest taxed fuel markets in the world, it is difficult to accept the Government's argument that fuel tax is not the issue. It may not be the sole issue, but it sure is an issue!

There is a petition running on the Prime Minister's website calling for a 30% reduction in fuel duty.

There was also a considerable touch of irony about the flying visit to Aberdeen. In the past the North Sea oil and gas industry's requests for an equitable tax regime and for government support in extending the life of the North Sea fields have received, at best, a lukewarm reaction from government.

It would be interesting to know what hard talking went on behind the door of that hotel just outside Aberdeen. I can't imagine the industry leaders would miss the opportunity to point out the need for more government support for the industry that has helped keep the UK economy afloat for almost 40 years, before agreeing to take part in the announcement of increased production.

North Sea platform

The UK is the world's 12th largest oil producer, ahead of countries like Kuwait. North Sea oil and gas produces three-quarters of the UK's prime energy needs and, far from declining, it is expected this figure will rise to 80% by 2020.

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