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

Yes, and many governments control prices of basic goods like that. However in countries where markets don’t like to be regulated, this would be a political suicide and would prevent oil companies from raking in all that sweet sweet profit