Motorists will bear the brunt of Labour's tax increases
Unleaded could even rocket to a record high of £1.25 a litre if crude oil costs rise over the coming year.
The price surge is set to start on New Year’s Day when VAT returns to 17.5 per cent, triggering a 2.4p-a-litre rise in petrol costs. More increases in fuel duty will kick in later in 2010.
Hugh Blaydon, of the Association of British Drivers, said: “It is just madness to take people’s money this way. The cost of fuel in this country is as high as it is because too much of it is tax – 70 per cent is pure revenue for the Treasury.
“Motorists are seen as a convenient cash cow by the Chancellor and it’s always the poorest people that are worst affected.”
Luke Bosdet, spokesman for motoring group the AA, said: “It is a really dismal prospect for 2010. The pressure on prices will be enormous. Drivers have reached breaking point and they can’t afford to absorb any extra costs into their budgets.”
The VAT increase will cost consumers around £11billion within a year as it ramps up the price of goods, from new clothes and electrical goods to household bills. But drivers will be at the sharp end of the tax hike because most forecourts will slap it straight on to their pump prices on Friday.
Tesco, the UK’s biggest retailer, has pledged to freeze VAT at 15 per cent on thousands of products after January 1 but will add the higher tax rate straight on to its petrol prices.
The average price of unleaded fuel yesterday was 107.66p a litre, compared with 87.85p this time last year. Diesel was 109.30p a litre, up from 99.52p a litre a year ago.
RMI Petrol, which represents two thirds of the UK’s 9,000 forecourts, predicts pump prices could soar 5p a litre by April and by 10p a litre by the end of 2010 because of various tax hikes.
Its chairman Brian Madderson warned that petrol costs could rise even more sharply if the price of crude oil soars.
He said: “The predicted 10p per litre rise does not take into consideration any increase in the world oil price which could add another 3p to 5p per litre to forecourt inflation. We might well see pump prices in the second half of 2010 in the range 120p to 125p per litre.”
The Government will add another 1p a litre plus inflation to fuel duty in April and at the same time withdraw a duty incentive it currently gives refiners for producing biofuel.
Another feared hike in VAT to 20 per cent combined with a possible 2p a litre fuel duty hike in late 2010 would slap another 5p a litre to pump prices.
AA spokesman Mr Bosdet claimed drivers had already got a raw deal from the Government when it reduced VAT to 15 per cent in November 2008 because the Chancellor increased fuel duty by 2p at the same time.
He urged drivers to write to their MPs demanding action on the soaring cost of fuel.
Adrian Tink, motoring strategist at the RAC, said: “It looks like in 2010 the assault on motorists’ pockets will continue from Government.
“The really worrying thing is not only are you being assaulted by your own Government but you have also got the problem of world oil prices.”
Oil costs on the global market hovered at around 79 dollars a barrel yesterday, close to their 2009 high point of 82 dollars.