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Fuel Prices
In 2000, a barrel of crude oil cost $87. Today has seen a $33 increase; taking the average price of a barrel in 2008 to $120. Recent studies have shown that petrol and diesel are more expensive in Britain than anywhere else in the world. This is mainly due to the fact that fuel duty and VAT are accountable for 75% of fuel prices in Britain. On top of this, there are other economic factors that contribute to the pricing of fuel:
- The rapid industrial escalation of China and India has caused the demand for oil to quickly overtake the supply.
- The continuing depletion of limited energy resources, also contributes to the unbalance between supply and demand.
- Oil is priced in dollars. So when the dollar devalues, the price of a barrel of crude oil increases; a devaluation of just 1% causes a rise of $4. However, on a brighter side; when the dollar increases in value, then fuel prices should go down.
Fuel prices have been fluctuating, for many differing reasons, for over a century;
- Between 1909 and 1921 a rise in taxation prices (escalating from 3d in 1909 to almost 6d in 1915) caused a rise in fuel prices. However, in 1921 when the tax was removed the price of petrol fell by £1.50 (from £4.58 to £3.08) a gallon in only a year.
- Duty was introduced in 1928 which increased 5d in 10 years, reaching 9d in 1938.
- From 1939 to 1950, rationing prevented much increase in prices staying, on average, at £1.85 a gallon.
- On average, petrol prices were at their cheapest in 1990 reaching only £2.40 a gallon.
- The retail price for four-star petrol, in 1999, was roughly £3.46 a gallon.
- Since 1990, the dramatic increase in prices may be credited to rises in tax.