Government Petrol Profit!

12.10.00pm UTC (GMT +0000) Sat 31st May 2008

The cost of running a car has soared by up to £2,200 in the last year.

The cost of running a car has soared by up to £2,200 in the last year. Higher charges for fuel, insurance and road-tax have pushed up the price of driving by four times the rate of inflation, according to the AA. The increasing cost of taking to the roads follows growing concern over drastic rises in food, housing, heat and council tax bills.

In the 2007 Budget, the then Chancellor Gordon Brown announced slightly above-inflation increases in fuel tax, to be implemented in October 2007 (a rise of 2 pence per litre), April 2008 (2 pence per litre) and April 2009 (1.84 pence per litre). These were the first above-inflation increases in fuel duty since the first fuel tax protests in autumn 2000.

Gordon Brown has said he was "very worried" about the impact of rising fuel prices on families and pensioners, but stopped short of discussing a cut in fuel duty to bring prices down, despite the government raking in £123million per month more in VAT on fuel sales than it did just a year ago.

Who makes the profit on a litre of petrol? If a litre of petrol costs £1.10, it comprises 50.35p in fuel duty and 16.38p in VAT. The wholesale price of the fuel is about 42p, leaving a profit of about 2p for the retailer.