David Cameron has been endorsing fuel price stabilisation keep control of the soaring fuel prices. Fuel prices have recently hit all time highs with the increase in VAT and duty. The policy was one of the leading points in the Conservative governments manifesto leading up to the election. However last month, Cameron announced that the treasury has extreme doubts of the efficacy of such policy and predict that enforcing any type of price stabilisation could be detrimental to the nations budget. The idea of fuel price stabilisation had been originally suggested in order to compensate for the huge swing in fuel prices. The scheme would in effect ‘adjust’ by reducing fuel duty as oil prices increase and increasing duty if prices fall. It would yet again appear that Cameron would not be pushing this any further as the treasury have made it clear that they are more concerned with decreasing the financial deficit than keeping fuel prices at stable.

The AA has released figures showing that the increase of petrol has already had a significant effect on petrol sales. Between 2008 and 2009, petrol sales were down on average 6%. The last 3 months of 2010 alone saw sales drop another 3.4%, this decrease in sales is set to continue as the increase in duty doesn’t seem to be slowing down. Fuel prices in the UK are some of the highest in Europe, something some have argued is unnecessarily so.

It is important to note that having high fuel prices will also have a detrimental effect on businesses as well as individuals. It has been argued that having such price stabilising schemes are essential to keeping businesses afloat as the ever increasing price of duty will surely put people out of pocket. Hauling companies who’s profits are heavily effected by fuel prices will undoubtedly be the most effected as their profits are heavily decided by the cost of fuel.

Similarly, car insurance has been escalating in cost. 2010 saw in increase of approximately 44p per day. Bundled with the increase of petrol prices it is astonishing to hear that only 8% of drivers have stopped using their cars altogether. Even if there isn’t any plan to introduce a fuel price stabilisation fee, there remains a few things the government can still do, namely scrap the planned increase of duty in April that is set to make fuel prices soar even higher.