George Osborne
Osborne said he wanted to see lower prices at petrol pumps as he announced petrol duty freezeReuters

UK Chancellor George Osborne announced a freeze in petrol duty in his pre-election budget, despite the drastic fall in oil prices

Many economic analysts had suggested the time was right for a rise in petrol duty, with oil prices significantly lower than they have been for years.

The fall in oil prices provided an economic window for the government to increase the UK Treasury's tax take from petrol, as manufacturers are facing lower costs for oil.

Yet with an election looming, Osborne has gone ahead with the populist measure of freezing petrol duties in the hope that providers will reduce prices at petrol stations.

"I want to help families with the cost of filling up a car," Osborne said. "I want to make sure that the falling oil price is passed on at the pumps," he told the House of Commons, before announcing that the fuel duty increase that had been scheduled for September would be cancelled.

"Petrol frozen again, it's the longest duty freeze in 20 years, it saves a family £10 every time they fil up a car."

Oil prices have fallen by more than 60% since June 2014, due to a supply glut and weak demand in advanced economies. The drastic fall in oil prices has not been mirrored by price cuts at the UK's petrol pumps, but prices have come down noticeably in the past few months.

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