Drivers in the UK are experiencing record petrol prices. Yet, the country exports millions of litres of fuel every month to the US where they pay less than half the price.
This should be top of the political agender in the UK, fuel poverty is rife and the government has the power to help consumers.
– The UK is exporting millions of litres of fuel to the US each month, where motorists pay half as much to fill their tanks.
– UK petrol prices are rising at the fastest rate in 17 years, while in the US they are only paying 60% compared to the UK.
The UK’s petrol prices are second-highest among the Group of 20 member countries. Only French drivers pay higher. The UK’s petrol prices aren’t just high; they are also rising at the fastest rate for 17 years. Drivers in the US face the highest gasoline prices yet they pay less than half of the British.
Why will 3 billion litres (and the components that make it) of petrol be shipped from the UK into the US each year? Taxes are almost entirely to blame.
On June 6, the most recent day for which Globalpetrolprices.com published figures, a litre of petrol in the UK cost £1.76, equivalent to $8.35 a gallon. This compares to the US at $5.04 per gallon or PS1.06.
According to Vortexa Ltd, a shipping analytics company Vortexa Ltd, the May flow from the UK to the US was 1.85 million barrels or 300 million litres. This is a 15% increase over the previous month and the highest since December.
The UK is part of an international trade network for crude and refined products. Cargoes are brought into the UK to meet different fuel specifications from different countries.
This is because gasoline’s value to producers is not the same as what motorists pay. Taxes are the reason for this difference.
The UK has two taxes on petrol: fuel duty (or value-added tax) and fuel duty (or fuel duty). After a cut of 5 pence per gallon by the government in March, fuel duty is now imposed at a fixed rate. It is currently 52.95 pence/litre for unleaded petrol. This duty rate doesn’t change based on the fuel price.
The second tax, VAT does not apply. It is based on the fuel duty and the underlying fuel price at 20%. This means that motorists in the UK pay tax on the tax.
On June 6, 82 pence was paid for a litre of petrol in the UK. This is equivalent to $3.89, or 47%. The government treasury received the fuel duty and VAT. The remainder covered the cost of the crude oil, delivery, processing and transport to the pumps. Profit margins are available to all companies involved in the supply chain.
After you subtract the tax and delivery costs to gas stations, it becomes very attractive to ship petrol across the Atlantic to a market with lower prices.
