As I predicted UK marine diesel, more commonly known as red diesel, is going to soar in price this summer. What will happend with the Norwegian prices is totally unknown, but it is an open question of how long Norwegian politicians, in particular Norwegian socialist and devoted environmental politicians, can keep pleasure boaters pollute with 30 percent tax-cut.
£216 per annum
Ancasta, the yacht broking company, have compiled data on the useage of the fuel made by sailors and motorboat users:
The average boat engine has 60 hours use per annum.
An average 38 ft twin engined motorboat runs on full speed at 45 litres per engine, using 90 litres per hour for both engines.
If red diesel is doubled, with VAT, the added cost for an average use (60 hours per year) is £2,601. For a sailboat, it’s nearer £216 per annum.
Ancasta has produced its engine usage figures derived from over 22 years of experience of brokerage. Sales Director Ashley Overton says “We always calculate that if a boat is five years old, it will have 500 or less engine hours. In reality, looking at our records, the figure is nearer 60 hours per annum.”
“Looking at the figures as a worst case,” continues Ashley, “I don’t think anyone is not going to buy or use their dream boat, which could have cost around £150,000, because of an increase of around £2,000 per annum.”
In addition, Ancasta points out that as well as a proposed lengthy transition period before the tax on red diesel is increased, it is not even clear at this stage what level of tax will be imposed. Most of the data issued has been looking at the worst case scenario which effectively doubles the price. Nevertheless, the European Commission has left an option for tax on marine leisure fuel to be increased, but not necessarily doubled.
3 months after the announcement that red diesel prices are likely to double, the UK Government is still grappling with exactly what the European Commission’s ruling means.
The message seems to have been understood that the marine industry is going to need a lengthy transition period to adapt to the price hike, and the British Marine Federation have requested a statement from Revenue and Customs at the London Boat Show (5-14 Jan) to this effect.
But exactly what that price hike will be is what is on most boat owners’ minds.
While the European Commission’s abrupt decision on 6 December technically only imposes an extra 12p per litre (ppl) on the existing price of diesel, bringing the cost up to around 75ppl, there is an increasing feeling that the Government may impose the full 48.35p road duty rates that the marine industry always feared.
£1 per litre
This would see diesel prices rise to more than £1 per litre.
From 1 January 2007, each litre of fuel used for leisure has to carry the minimum rate of EU duty of 21p. Fishermen and other commercial users will continue to use red diesel at its existing tax of 6.44p.