Fuel for thought from across the Atlantic

By Calvin Palmer

With much of the north and east of the United States covered with snow and experiencing mind-numbing temperatures, at least those who can get around in vehicles can do so without it costing them an arm and a leg.

The British are not only starting 2010 with freezing conditions but also petrol costing the equivalent of £5 ($7.98) a gallon.

According to motoring organization, the AA, the average price of petrol has risen to 110.04p ($1.76) a liter, with diesel now 111.77p ($1.77) a liter.

Part of the price rise is accounted for by VAT being restored to its usual rate of 17.5 percent on January 1.

The average cost of petrol a year ago was 85.99p ($1.37) a liter and diesel averaged 98.06p ($1.56) a liter.

Paul Watters, the AA’s head of public affairs, said: ”The fact that petrol sales by supermarkets were 1.8 per cent down in the third quarter of 2009 compared to the same period in 2008 while other retailers boosted their sales 3.0 per cent may indicate more selective buying by cash-strapped drivers.

”With further increases in tax due this year and the price of oil back above $80 a barrel, the winter weather isn’t the only problem sending a shiver through drivers.

”In November, 60 per cent of AA members said they were cutting back family budgets, car use or both to compensate for higher fuel costs and we expect that to get worse. The Treasury has already predicted that fuel duty income will be £0.2 billion ($0.3 billion) below budget this financial year. Retailers who look to take extra from the driver better beware of precipitating falling sales.”

[Based on a report by The Daily Telegraph.]

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