The pressure on world oil prices has led to record costs for fuel in Britain, raising concerns that household incomes could be hit significantly and the government may
have to change its policies.
The average price of petrol in Britain has hit a new record of 1.32 pounds (2.14 U.S. dollars) per liter. Such petrol spike in Britain is "very much based on what's happening in Libya and in the Middle East at the moment," said Andrew Howard, spokesman for the Automobile Association, one of Britain's oldest motoring organizations.
The toppling of regimes in the North African states of Egypt and Tunisia has created much unease in the Middle East. Oil prices have
been pushed high by disruption of oil supplies in Libya after unrest broke out there in mid-February, and a continuing fear that the armed
confrontation between Muammar Gaddafi and rebels opposing to his rule may escalate.
Pessimists worry that similar disruption could happen in other major oil-producing countries in the Middle East.
In Britain, average petrol prices in mid-February hit yet an all-time high of 1.28 pounds (2.08 U.S. dollars) a liter in response to the
uprisings in Egypt and Tunisia. It then rose nearly 4 pence a liter in response to turmoils in Libya.
Howard told Xinhua that fuel prices were also driven higher by retailers attempting to recoup profits lost after a winter of bad weather which forced drivers off the roads in November and December, and by an increase in the sales tax VAT from 17.5 percent to 20 percent starting in January.
In Britain, petrol prices stay higher than most other countries due to central government taxation.
Howard said tax now represented 62 percent of the cost of a liter of petrol, but it used to be as much as almost 80 percent in 2000, indicating that the present spikes were driven by mostly external forces rather than government policy.
In 2000, surging gas prices sparked protests and strikes led by lorry drivers and farmers who blockaded the entrances to oil refineries and
oil shipment depots, which resulted in widespread food shortages and disrupted industrial production.
The government is keen not to see that again, and also to keep the economy moving. Chancellor of the Exchequer George Osborne will announce his budget for the coming fiscal year on March 23. Domestic media are full of speculation that Osborne may act to reduce gas prices for consumers, perhaps by lowering taxation or creating a taxation mechanism that responds to world oil prices.
A British exchequer spokesman said: "The government recognizes that higher fuel prices increase the cost of living for people and is
examining options as part of the budget process, including a fair fuel stabilizer that would reduce fuel duty as oil prices rise but increase
them when they drop."
PUBLIC CONCERN
Market trader Gavin Harman said he noticed food prices were going up.
"The cost of fruit and vegetables has gone up, I think it's because of the higher fuel prices. It costs more to deliver the produce. I hope
it doesn't go up any more," he told Xinhua.
Nursing assistant Valerie Jones said she felt unaffected by rising fuel prices because she did not own a car. "I hope fuel prices don't
stay at this high level. If they do, my weekly shopping may cost more."
Alan Maynard, an IT technician, said he had read newspaper headlines about high fuel prices, but fuel prices had been high for some time already and he did not feel the present situation was a crisis.
"Already I think twice about using my car, especially with good public transport in London," he said. "The real crisis could come if there is
more unrest in the Middle East. That could send oil prices shooting up, and then who knows what could happen?"
A leading environmental group, Greenpeace, sees the high oil prices as a signpost that the government must change direction on policies and
move away from oil.
Vicky Wyatt, head of Greenpeace's transport campaign, said: "This is at least the fourth time in the last 10 years that volatile oil prices
have pushed the cost of motoring right to the top of the political agenda. Every time the issue does raise its head the politicians tinker with the tax regime rather than addressing the cause of the problem -- which is our country's dangerous over-dependence on oil."
"Ministers should act immediately to ramp up the efficiency of our cars and invest in electric vehicles by driving forward urgent measures to reduce the amount of oil we use," she added
She said that by doing this the government could save money, boost new industries and reduce carbon emissions all in one go. "It is time to
go beyond oil," Wyatt said.
However, the British government also views higher oil prices as a spur to innovation, and an incentive to move toward an economy which uses
less oil.
In a speech to British business leaders on Wednesday, the coalition government's minister for energy and climate change Chris Huhne said
that record oil prices in the 1970s and 1980s had sparked a technological advancement from vehicle manufacturers to make engines more fuel efficient.
BRITAIN AS AN OIL PRODUCER
Britain is a producer of oil, from its North Sea oil fields. The price of Brent crude oil has risen 15 percent over the past month, largely
in response to the crisis in Libya.
World oil price hikes also add government taxation revenue from the North Sea oil fields, bringing at least some positive effect on
Britain.
Nevertheless, a British government spokesman said higher world oil prices did not always translate into a taxation windfall for the British government.
In addition, only 13 percent of the British economy is now based on manufacturing, whereas in the 1970s when a major oil crisis broke out,
manufacturing used to dominate the country's economic output. Back then, high oil prices caused a major slump in manufacturing and the
whole economy. That couldn't be the case now.