Combatting the Impact of Increases in Fuel Prices

30th May 2008

Highland Councillors are set to step up their campaign to cushion the impact of rising fuel prices. A report to be considered by the Transport Environmental and Community Services Committee on Thursday highlights that the Council alone faces an increased fuel bill of £725,000 in the current financial year.

It recommends that Convener of The Highland Council, Councillor Sandy Park, should write to the Chancellor of the Exchequer to express the Council's concerns about the effect of increasing fuel prices on the Highland economy and Council Services and ask that he introduces measures to stabilise fuel prices against the background of increasing oil prices, including the proposal for a Fuel Duty Regulator.

It also urges that a joint approach be made by neighbouring rural Councils to lobby Highlands and Islands MPs and MSPs on the subject.

Councillor John Laing, Chairman of the Transport Environmental and Community Services Committee, said that in an area that extended to 26,484 square kilometres, representing 33% of Scotland's land mass, transport was a key element of service delivery, with fuel a major cost element in services such as winter maintenance, road maintenance refuse collection, school transport, and home care.

The Council's fuel bill had risen from £2.553 million in 2003/04 to £3.615 million in 2007/08, an increase of 41.6%, and is likely to increase by at least a further 20% (£0.725 million) in 2008/09.

Fuel costs have a significant impact on the Highland economy, and increased costs will impact directly on general transport; tourism, fishing, agriculture and forestry.

He added: "Increased fuel prices will also affect individual families, and households in rural areas are more likely to experience fuel poverty which is exacerbated by rising energy costs, and in particular oil prices. Oil is one of the most common choices for heating in rural areas not covered by the mains gas network, and large price increases can affect the ability to pay heating costs. This, coupled with lower average incomes, and often a more exposed climate, can have a significant impact on the household budget."

A proposal for a "Fuel Duty Regulator" was being promoted by Stewart Hosie MP, the SNP Treasury spokesperson at Westminster. Under his proposal higher oil prices would trigger lower fuel duties, which currently make up 60% of the price of petrol and diesel.

The Fuel Duty Regulator would result in an automatic freeze on fuel duty increases when world oil prices rose above the levels forecast by the Chancellor, and a parallel reduction in duty to match the extra revenue from VAT from higher pump prices.

The proposal for a Fuel Duty Regulator, he noted, was backed by the Road Haulage Association who believe that the proposal will bring some stability to the haulage industry.