After months of daily increases in pump prices, Mr Osborne said he would introduce the ‘Fair Fuel Stabiliser’ which was promised by the Tories before the election.  Again this will be financed by the oil companies in the North Sea who have enjoyed a bonanza as oil prices have soared by 35 per cent over the last five months.  So long as the price of oil exceeds $75 a barrel, fuel duty will not be increased beyond the level of inflation as measured by the Retail Prices Index, while oil companies will see a 12 per cent increase in the tax on their profits.  Should oil fall below this threshold then the fuel duty escalator would be re-introduced and the tax levied on oil companies cut.  There is nothing to stop oil companies from trying to pass the tax increases they face under the new scheme onto motorists, but Mr Osborne’s moves were hailed by motoring groups and the haulage industry last night.  Prices at the pumps have reached record highs on an almost daily basis of late. Earlier this week the average petrol price was at an all-time high of 133.46p a litre, while diesel had gone through the 140p a litre mark for the first time and was averaging 140.01p.  "This action has probably stopped a ‘summer of discontent’ and is a common sense move. Any increase in duty would have bled many drivers on low incomes dry so this action offers short-term first aid," said Edmund King, the AA’s president.  Stephen Glaister, director of the RAC Foundation added: "He is also right to link the level of duty to the underlying price of oil rather than use above inflation rises to raise money indiscriminately from motorists who effectively have no choice other than to run their cars."  Meanwhile Theo de Pencier, head of the Freight Transport Association, praised what he described as a "landmark budget."  Brian Madderson, chairman of RMI petrol, which represents 6,000 garages, welcomed the announcement.  "This is great news, we have campaigned tirelessly since early January when we realised the scale of the increase motorists faced.  "We commend the Coaltion for being a listening Government for listening to our recommendation for a fuel duty cut funded by the windfall tax of over £2 billion they would have realised from increased VAT."  But it was dismissed by Ed Balls, the shadow Chancellor. "The idea that drivers around the country should be grateful for a 1p cut in fuel duty when George Osborne’s VAT rise is adding 3p to the price of petrol is laughable.  "When people fill up their cars this weekend, they should remember £1.35 of the cost is because of the Tory VAT rise."  The Treasury has also cashed in as a result of the spike in the cost of oil.  Earlier this year The Daily Telegraph disclosed that the Government is on course to rake in around £13 billion in taxes from the North Sea, rather than the £9.8 billion it had assumed in November.  The windfall tax on oil companies will earn the Government an additional £1.78 billion in the current financial year, the Treasury said.
Motorists were finally granted some respite from the spiralling cost of petrol    yesterday when the Chancellor scrapped next month&rsquo;s planned fuel duty    increases and instead announced a surprise 1p cut in tax per litre.