THE panic buying at Merseyside and Cheshire's petrol stations proved unnecessary last week as the expected blockades at oil refineries simply never happened.

But there is no doubt the price of petrol is now firmly back in the national consciousness, perhaps for the first time since the fuel crisis of 2000,

What focused minds this month was the major jump in prices at the pumps with the cost of a lite of unleaded surging past the £1 mark for the first time at some stations, with one Liverpool station charging as much as £1.20 a litre.

Putting that in perspective the crisis of 2000 was sparked by prices reaching 80p per litre.

The surge followed rising summer oil prices and damage to oil refining capacity in the United States following Hurricane Katrina.

But the fact remains that raw materials costs do not represent the biggest chunk of what we pay for our petrol.

The AA estimates that for every £1 we spend on petrol, about 67p is taken in tax.

Prices have now dropped to around 90p a litre at some supermarkets, so just where does all that money go?

Of that 90 pence, 47.1p goes straight to the Treasury in duty while another 13.4p is taken in VAT. The actual product, even despite oil prices stretching beyond $60 a barrel, makes up just 23.2p, with the retailer and delivery costs taking the remaining 6.3p.

So has the time come for Chancellor Gordon Brown to reduce the huge windfall he receives from petrol sales?

andykelly@dailypost.co.uk

YES SAYS Tony Vickers, Association of British Drivers >>>

Time to drop posturing and review way fuel is taxed

YES SAYS Tony Vickers, Association of British Drivers

THE first duty of any British Government is to protect its citizens from external threat.

When he claimed that Britain was under threat from Saddam Hussein, Tony Blair was prepared to spend billions in taxpayers' money to bolster the US forces in Iraq. Not to mention spilling the blood of British soldiers.

Now that terrorism generated from beyond our borders has appeared again in this country, New Labour is quite prepared to spend a fortune on national security and to sacrifice our civil liberties in the process.

We are told that although they dislike having to do these things, the government is duty bound to protect us.

How strange then that when the economy is endangered by an external threat in the form of spiralling oil prices, the Chancellor feels no need at all to make a move to protect us from the consequences.

Instead, he cries crocodile tears and says how he sympathises with businessmen and private motor-ists alike when faced with fuel costs that are rapidly becoming unaffordable.

To prove his concern, he has called on OPEC to help him continue to fleece British drivers by increasing oil production and relieving him of the inconvenient pressure to reduce fuel duty. This despite the fact that OPEC has already increased production months ago.

It is true that the rising price of oil is not our govern-ment's fault and we have little power to control world oil markets. Nevertheless we have considerable control over domestic taxation and the government must act before the effects of high fuel prices filter down and do their damage.

The consequences of continuing inflationary fuel prices will cost much more than the loss engendered by reducing fuel duty. They are likely to lead to job losses, a reduction in consumer spending and ultimately to a recession.

The time has come to drop the posturing and review the way fuel is taxed once and for all. Industry and the public need to know that a staple product such as motor fuel will remain available and affordable for the foreseeable future or at least until a viable alternative is offered.

The ABD has a simple solution. We should drop the current fixed fuel duty of 47.1p per litre and introduce a percentage based, sliding scale duty which would fall when oil prices rise and increase when they go back down. The intention would be to stabilise the cost of a litre of fuel at around 70-75p.

That way, we can plan for the future without the inflationary effects of runaway oil prices threatening our living standards and our growing economy.

In addition the Chancellor should end the sharp practice of double taxation on fuel. At present we are being charged VAT on the combined cost of fuel and duty.

Therefore 8.24p per litre is a tax on a tax. If a business were to indulge in this kind of creative accountancy, the directors might well find themselves in court for fraud.

NO SAYS Frank Kennedy, NW Regional Campaigns co-ordinator, Friends of the Earth >>>

Taxes must be invested in fossil fuel alternatives

NO SAYS Frank Kennedy, NW Regional Campaigns co-ordinator, Friends of the Earth

HIGHER - and volatile - oil prices are a fact of life from now on, until the day comes when we no longer depend on the stuff.

No Chancellor should react to the knee-jerk minority who complain about taxes whenever the oil corporations declare a shortage.

This is because: this will happen time and again; producers and suppliers of other key commodities will grab the idea that the "tax man" can be called on to cover their flow problems and protect their profits; and governments will still find other ways to tax us.

What the Government must do is invest our taxes in alternatives to polluting road transport.

I have more sympathy with the argument that massive oil companies (richer by far than many nation states) could pocket less profit for a short while.

However, in the real world economists agree that the current high price of petrol is vital to stimulate the research, now belatedly under way, into seriously fuel-efficient cars and fossil-free fuels so we can continue to travel in the future.

It is also the single most likely spur to get people to car-share, or better still use public transport regularly.

Alongside our desire to be healthy, petrol prices can turn our minds to walking and cycling. It should focus the Government on improving transport, and encouraging tele-conferencing, e-mail and video links in the workplace.

Despite the current rise in petrol prices, motoring costs have steadily fallen, in real terms, since the 1970s - and even since Tony Blair came to power eight years ago. Bus and train fares have risen sharply over this time. Where's the justice in that, for the households without a car?

Fair taxation means firstly that we should be taxed according to our ability to pay; secondly, according to the pollution we cause.

Liverpool city centre, an air quality management area, is failing EU standards partly as a result of our car and truck exhaust fumes.

The greatest threat to all of us, more especially to our children and theirs, is climate change, in the clear view of the Government's chief science adviser.

Emissions from road transport account for 22% of the man-made climate threat. This figure, along with the climate damage caused by aeroplanes, is rising.

It's ironic that the latest oil price rise was triggered by refinery damage resulting from Hurricane Katrina; we face more intense storms as fossil fuel use affects our climate.

We need to have cut our greenhouse gas emissions by at least 60% by 2050 to offset the worst possible effects of climate change.

Friends of the Earth's climate change campaign, The Big Ask, is calling for Government action, but we can all make an impact.

That means taking far fewer car journeys and using far cleaner cars when we do.