Petrol price record prompts call for fuel duty cut

The price of petrol has hit another record high, prompting a small business organisation to urge the government to consider cutting fuel duty.

The average price of unleaded has hit 127.7p per litre, according to Experian Catalist.

The government confirmed it was looking at a fuel price stabiliser, which would cut duty when the price of oil went up.

But the Forum of Private Business has urged the government to just cut duty if this was too difficult to introduce.

Prime Minister David Cameron said he was talking to the Treasury about the possibility of introducing a Fair Fuel Stabiliser, but warned that it was "not simple".

It was hoped that such a scheme, mentioned in the party's manifesto, would reduce the volatility of the price of petrol and diesel at the pumps.

Duty would be cut when oil prices rose, and increased when prices fell.

The Forum of Private Business criticised the Conservatives for not following through on their stabiliser pledge, when it was urgently needed.

"Instead, it has actually increased duty on fuel by going ahead with two rises inherited from the previous administration, and effectively implemented a further price hike this month with the 2.5% increase in VAT," it said.

"If the fuel price stabiliser is again deemed to be unworkable, a significant reduction in duty - or perhaps a reclassification of the VAT rate on fuel - is desperately needed to help keep businesses moving," the business body added.

The price of fuel has risen steadily over the past month due to recent increases in the price of oil, as well as a 0.76p fuel duty increase on New Year's Day, and the VAT rise in the first week of the year.

The AA estimated that the two government measures increases added around 3.5p to the cost of a litre of both petrol and diesel.

The average price of unleaded petrol is at a record, but the average price of diesel, currently 132.08p, is still marginally below its all-time high.