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Armed Forces: Oil Prices

Volume 699: debated on Wednesday 5 March 2008

asked Her Majesty's Government:

What impact the current level of world oil price is having on the cost of fuel for the Armed Forces; and to what extent this is leading to (a) reduced operational activity, and (b) overruns on budgeted costs. [HL2138]

Initial estimates are that fuel price and related currency exchange rate changes (predominantly affecting maritime and aviation fuel) have added outturn costs of around £80 million in 2007-08 to the departmental fuel bill compared with 2006-07.

The cost of fuel for operations is reflected in this figure. However, such expenditure is paid for from the Treasury Reserve, and operational activity is therefore unaffected by higher fuel costs.