Conservatives promise (temporary) 10p cut in fuel duty
The Conservatives will promise to cut around 10p off the price of petrol if they come to power in next month's election.
Plans for a 'fuel duty stabiliser' are expected to be included in the party's manifesto, which would temporarily cut prices at the pump to shield motorists from fluctuations in the cost of oil.
The Daily Telegraph reported that the proposal would be funded by increased taxes on the oil companies when wholesale prices go up.
Assuming the policy does appear in the Conservative's manifesto, it would be set against the current government's relentless above-inflation increases in fuel duty. Labour may have spread out its latest plans, but they will still see a 3p per litre rise in prices over the next year.
However, the stabiliser system will not mean the public makes a permanent saving at the pump – the tax would only drop for as long as wholesale prices remain at a certain level. When those prices fall the full level of fuel duty would return, and the government would be free to increase that as it saw fit.
A senior Conservative source told the newspaper last night: "We are very straight with people. This is not a tax giveaway – instead it is a sensible, balanced policy that protects families from big increases in the oil price.
"When the oil price rockets, the tax falls and the petrol price at the pump stays stable – and vice-versa when the oil price falls."
The Conservatives have not revealed what price oil would need to reach to enact a stabiliser – inevitably, that would be subject to a consultation period following an election victory – but we'd expect it to be set considerably higher than the current $85 a barrel cost.
Nevertheless, the nation's motorists are likely to welcome any policy which seeks to protect them from extortionate prices at the pump. Especially givent that the world's biggest single user of petroleum (the US military) recently predicted that there could be a shortfall in oil production of nearly 10 million barrels per day by 2015.
Any fall in global surplus capacity would push petrol prices into the stratosphere.
The Conservatives are due to unveil their manifesto tomorrow.