Road freight operators are under mounting pressure to
improve the fuel efficiency of their vehicles for both
economic and environmental reasons.
In Britain, fuel prices have risen by approximately 15 per
cent in real terms over the past three years, largely as a
result of increases in taxation. Since 1980, the pre-tax
price of diesel fuel (derv) has fluctuated quite widely,
while the tax level has gradually increased (see Figure 1).
In 1980, tax represented 46 per cent of the price of derv,
today it accounts for 67 per cent[l]. This trend is likely to
continue, following the announcement in the 1993 Budget
that road fuel duties will be increased by an average of at
least 3 per cent in real terms in future budgets. The
imposition of higher taxes on fuel consumption is part of
the Government's policy of containing the growth of C02
emissions. At European Community level, even higher
levels of carbon tax have been proposed, rising to $10 per
barrel by the year 2000.
By the end of this century, the market price of oil is also
likely to be significantly higher, in real terms, than today.
World oil prices are currently at an historically low level