Forecourt prices continue to inflame debate over taxes and profit margins

The oil companies' main argument for maintaining high fuel prices - despite a recent fall of a third in the international price of crude oil - is that much of the cost is made up of tax and duty. For every litre of petrol bought on the forecourt, 10p is the wholesale cost of the fuel, some 60p is excise duty and value added tax, and the rest is the gross margin charged by oil companies for transport, distribution and staffing costs. This does not go down well with hauliers, farmers and the public. While they have seen their fuel costs rise by more than a quarter since January 1999, the big three oil companies - Royal Dutch/Shell, BP Amoco and ExxonMobil - have seen profits rise by billions to Dollars 9.6bn, (Pounds 6.4bn) Dollars 10.1bn and Dollars 12.5bn respectively for the last nine months. Despite this, independent consultants say the oil companies have a valid point to an extent. Robert Mabro, director of the Oxford Institute for Energy Studies, agreed that oil companies were making little out of pump sales in the UK and most of the downstream profits were made overseas. One of the government's main arguments for the fuel duty escalator - which was introduced under the Conservatives and led to the current high taxes - was to discourage car use and cut greenhouse gas emissions. However, Mr Brown admitted when he announced the end of automatic fuel tax increases in 1999 that the money raised was also being used to reduce Britain's debt and pay for public services.

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