The cost of living crisis in the UK is set to get worse with a rise in the prices of petrol and diesel. The war in Ukraine means that the price at the pump could get even more expensive
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As April approaches, families across the UK will be looking warily at their bank accounts as oil prices hit record highs.
Diesel has been averaging a whopping £1.61 a litre, while petrol is now 155.62p – and as the war in Ukraine continues, the difficulties are only likely to get worse.
The government has already been criticised for not doing enough about the crisis, particularly Chancellor Rishi Sunak’s scheme to ease the pain of energy bills with a council tax rebate and £200 loan.
So what is the government doing about this crisis and why are fuel prices so high?
Why are oil prices rising?
Simply, oil prices are rising because it is more in demand and this has been made worse by the war in Ukraine.
There were already shortages that sent fuel skyrocketing last year and now businesses are cutting off ties to Russian oil. This means that the current crisis could well get worse – and more expensive.
The UK only gets around 6-8% of its crude oil from Russia and a 2020 Autocar report estimates around 18% of UK diesel is from the country.
This is not the same for much of Europe – around half of the barrels of oil Russia produces every day goes to the continent, with the country the world’s third-biggest supplier of oil.
The UK is hoping to totally phase out the use of Russian oil by the end of 2022. The EU is far more reliant on oil and has so far committed to drop its usage by around two-thirds.
With countries turning away from Russian oil, there is demand for it elsewhere, which pushes the prices up.
What is the government doing about the rise in oil prices?
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The government is hoping that a phasing out of Russian oil will help businesses in the UK adjust to the crisis, along with more reliance on its oil reserves and partner states.
Due to its commitment to imposing sanctions on Ukraine, it has warned that both oil and gas prices will rise as a result.
Yesterday, Business Secretary Kwasi Kwarteng said: “The government will also work with companies through a new Taskforce on Oil to support them to make use of this period in finding alternative supplies.
“The UK is a significant producer of oil and oil products, plus we hold significant reserves.
“Beyond Russia, the vast majority of our imports come from reliable partners such as the US, Netherlands and the Gulf.”
Since the record rise in prices for people at the pumps, there have been calls for the chancellor to cut VAT on fuel.
RAC fuel spokesman Simon Williams said: “These hikes are unprecedented and will sadly be hitting both homes and businesses hard.
“It’s therefore vital the chancellor acts quickly to limit the damage by cutting VAT to at least 15%, which would save drivers 6.5p a litre and take the average price of unleaded back under £1.50.”
TUC general secretary Frances O’Grady, meanwhile, called for a windfall tax on oil companies to invest in renewable energy.
Oil companies like Exxon Mobil, Chevron, Shell, BP, and Total have boasted huge profits this year, as working families struggle.
She said: “No-one wants to see UK energy imports paying for Putin’s illegal war against Ukraine. But working people will need [the] government to support them over the coming months. That means help for energy-intensive industries to keep energy supplies affordable and jobs safe. And it means help for working families to keep energy bills affordable.
“The best way to do this is with a windfall tax on soaring energy profits. And the government should accelerate public investment in decarbonising industry, renewables and nuclear, and insulating our homes, to reduce Putin’s power.”