Rising Petrol And Car Insurance Prices Increase Cost Of Running A Car

New figures have shown that the cost of running a car rose by as much as £2,200 over just twelve months with the soaring price of fuel, higher insurance and increase road tax at the route of the problem. These factors pushed up the price of driving by four times the rate of inflation according to the AA.

These rises in running a car come at a time when people are growing increasingly concerned about other price hikes in food prices and housing, as well as heating and council bills.

The AA Motoring Costs 2008 report has shown that Government imposed road tax has led to a reduction in car resale values. This has left many people having to pay off car loans in motoring ‘negative equity’. This has left some drivers unable to afford to run their car, but also being in a position where they can’t afford to sell it either as they would lose too much money.

The reports findings have increased demands on the Government to offer motorists some good news by scrapping a planned 2p a litre price hike in October 2008. Oil prices stand at a new record high with predictions petrol could be £1.15p by the summer of 2008 and as much as £1.50 a litre by the autumn of the same year.

People who own a 4x4 vehicle or ‘luxury’ car have been hit in the pocket the most, with their cost of petrol rising from £11,188 in 2007 to £13,346 in 2008, an increase of £2,176.

Much of the increase in 4x4 vehicles comes from higher road tax which has almost doubled to £400, which in turn has slashed the resale value of the vehicle by as much as a quarter.

Motoring groups claim that the price hike is not only affecting those who are able to afford these type of cars, as many less affluent people living in rural areas rely on the 4x4 all weather vehicles to get around their community and as part of their daily lives.

Drivers of large family cars have seen the cost of fuelling their vehicles jump from around £5,600 in 2007 to around £6,500 in 2008. This is a jump by nearly a fifth, on top of a 6 per cent increase on car insurance over 12 months. These cars too have been affected by a rise in road tax which could see an increase of as much as £100 by 2010.

The AA has urged the Government to re-think retrospective road tax and abolish their controversial proposal to introduce a 2p per litre duty on fuel.

Spokesman Mark McArthur for Forward, the transport think tank is concerned about the ever increasing charges to run a car, saying, “These figures are very worrying. How do you afford this large rise in running a car when your council tax is also going up, your food bill is going up and your gas and electricity bills are going up?”

Grant Thornton, the City accountants calculated that the Government are in a position to cut fuel taxes at the petrol pumps by up to 9p a litre because of the £5 billion windfall enjoyed by the Treasury due to the rising oil prices.