Petrol and diesel drivers issued warning on new engine ban – fuel could run completely dry

Petrol prices: Howard Cox calls for cuts to fuel duty

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After 2030 the sale of all new petrol and diesel cars will come to an end, however there will potentially be a significant lag time before everyone switches to electric or hydrogen vehicles. According to the UK Petroleum Industry Association (UKPIA) demand for petrol and diesel is likely to continue well in the 2030s with some scenarios showing product demand beyond 2050- especially from sectors such as HGVs which are harder to replace. Stuart Adam, Senior Research Economist at the Institute for Fiscal Studies (IFS) agreed there could be a decade or two of the existing stock of petrol and diesel cars remaining on the roads. He predicted petrol stations may start to close, particularly in areas such as the countryside, further accelerating the switch to electric vehicles.

However he warned those holding onto petrol and diesel cars the longest may be elderly or the poorest making switching harder for them.

Executive Director of the Petrol Retailers Association Gordon Balmer told there could end up being some areas where it was no longer sustainable to sell petrol and diesel.

He pointed out the ratio of petrol stations to people had already fallen considerably over the years, particularly in London and the South East where high land prices leave many tempted to sell to developers.

As demand for petrol falls he predicted many stations would evolve more around retail and offering services such as car washing, shopping and click and collect.

Larger sites could also accommodate electric charging points with many already rolling these points out on forecourts.

A spokesperson for the UKPIA said: “Forecourts will continue to adapt to demand with growing retail offerings such as groceries or coffee shops and integration with delivery services offering non-energy options for forecourts to consider.

“The example of Shell’s recently opened all-electric station in Fulham shows that for some locations a full charging site will be the market-led decision taken by some companies.”

As well as potentially less availability of local filling stations another challenge for motorists will be in the question of what the Government decides over future taxation.

According to the UKPIA fuel duty accounted for £28billion in tax revenue between 2019 and 2020 leaving major question marks over what happens if sales start to fall.

The UK Government has yet to give any indication on what it might use to replace the income but the UKPIA suggest potential options could include increases to fuel duty, an expansion of carbon pricing to the transport sector, or road pricing which could consider vehicle size and when drivers are using the roads.

Road pricing has already been put forward as a suggestion by Mayor of London Sadiq Khan who has proposed a pay-per-mile system for drivers on London’s roads.

Mr Balmer cautioned that government should not “force people off the roads”, adding that many people can’t currently afford an electric vehicle.

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“There needs to be some sort of scrappage scheme or incentives for them to transition”, he explained.

Mr Adam said there was a “tricky challenge” for the government as it will want to tax electric cars one way or the other in the long run but in the short term wants to encourage people to move to them.

Usually this would also imply taxing petrol and diesel more heavily however the government has kept fuel duty frozen since 2011 meaning a real term cut once inflation is factored in.

Mr Adam suggested it could become more “politically easy” to tax petrol and diesel cars more once ownership starts to fall and the vehicles are seen as less environmentally and socially acceptable.

Mr Balmer said the government would have to come up with a “fair system.”

He explained if road pricing was introduced there should be “a commensurate drop in fuel duty in order to avoid people having to pay twice.”

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