If petrol/diesel prices keep rising, couldn’t governments just cap the cost of petrol/diesel to keep prices lower for consumers?

Question

Question’s in the title……
I’m no economist but I’m sure most of the cost of fuel is Fuel Duty (tax)….. so even though capping the price of fuel would mean governments making less money off fuel-duty, wouldn’t they make this back in VAT on other goods as consumer spending increases? (Because consumers have more money in their pocket?)

In: 2

Answer 1

They’ve done this in Australia, taking off a tax we pay. So it’s still expensive, but not horrifyingly so.

Petrol prices are around $2AUD/Litre, +$1.44USD /L right now.

Sorry, don’t know your country and what measurement is used for petrol 🙂