Maltese and British burdened with surging fuel prices

In December, Cameron had announced the fair fuel stabilizer, aimed at keeping fuel duty down when oil prices rise, weeks before the General Election, when petrol prices stood at a record of £1.20 a litre.

However, yesterday, Cameron backtracked on his pledge, warning motorists not to raise their hopes.

“The cost of filling up a car is incredibly painful for families up and down the country and I understand that … I don’t want to raise people’s hopes too far because it is a difficult issue,” he said.

The “fair fuel stabilizer” is a concept based on the issue that, if oil prices rise and yield extra revenue to the Treasury, there might exist a way of sharing the burden between the Treasury and the motorists.

“If the price goes up, the tax comes down, and if the price comes down the tax goes up,” Cameron had said, adding that motorists were feeling as if they were carrying the entire burden with the cost of petrol currently at record levels.

The same plan had already received a no-go by the Office of Budget Responsibility (OBR) in September, where it claimed that it may cost too much.

The increase in fuel prices followed fears that it would rise even higher after BP and other oil companies were forced to shut down almost all production from North America’s biggest field following an Alaskan pipeline leak.

Fears are that a barrel of oil could hit the $100 mark. A BP spokesman said it did not know how long production would be affected.

Meanwhile, in Malta, Opposition Leader Joseph Muscat proposed awarding energy benefits to all families to help share the burden of the energy price surge. Muscat accused government of having taken irresponsible decisions which led to the increased prices of commodities.

In defence, Prime Minister Lawrence Gonzi said that fuel prices are determined by the international oil market and therfore are not a government’s decision.

“We buy oil from international markets, and we have no choice but to buy it if we want electricity,” Gonzi said.

Gonzi said that government had decided to buy enough oil for 2010 and 2011 in advance, when they are at a good price: “We’ve already done this for 2011, when the price was at $80 a barrel. Now it is around $100 a barrel.”

Commenting on Muscat’s proposal to subsidise everyone, Gonzi said government was not ready to subsidise everyone but is assisting those who are mostly in need.

“We could do that if we want to end up in the same situation as Greece, or the UK which increased VAT, or Cyprus which increased VAT on food,” he said.

Gonzi reminded that if government decided to re-introduce the old subsidy systems, people will still have to pay for them.