Britain's plan to scrap a subsidy next month on biofuels will raise the price of petrol to new UK records. The subsidy is to be abolished as of April 1, adding as much as 1.5 pence to the price of a litre of petrol or diesel at the pump, . Pump prices as high as £1.20 per litre are already setting records in some parts of Britain. Scrapping the biofuel subsidy, with reduces the cost of plant-derived fuels blended into the petrol and diesel accounting for 3 per cent of motor fuels consumed in the UK, could push up retail petrol prices by another 3 pence per litre. But why are British petrol prices so high, when the cost of a barrel of crude is more than 48 per cent off the all-time high set nearly two years ago? Oil refining margins have also fallen sharply and remain paper thin, so motorists everywhere should be getting a break. Part of the problem is the pound's loss of ground to the US dollar, the currency in which crude is priced on international markets. The exchange rate on July 11, 2008, when the European benchmark Brent crude hit a record $147.25 per barrel, was about 1.99 dollars to the pound. Yesterday, with Brent priced at $75.98, one pound Sterling was worth $1.53. As a result, the price of crude expressed in pounds has dropped only a third from the July, 2008, peak, falling from £73.99 to £49.66 per barrel. But that is still a big drop. The retail price of petrol in the UK, on the other hand, is now about the same as in July, 2008, when it hit its previous peak of 119.7 pence per litre, at least partly on the back of the record rally in crude prices. Higher taxes explain the discrepancy. Petrol is a common target for increased taxation by indebted governments in the developed world, because at least some of the electorate perceives this as good for the environment. Such behaviour a . The oil exporters' organisation complains, with some justification, that governments and consumers in industrialised countries are too quick to point fingers at oil producers when fuel prices rise. Economists note that taxes on transportation fuels not only penalise motorists, but also push up the prices of all manner of goods and services delivered by road, rail, sea and air, crimping economic recovery. Although OPEC may be off the hook this time in the eyes of British motorists who say they are being "mugged" at the petrol pump, its members can still expect fallout.The higher fuel taxes that Britain and some other debt-strapped European countries are imposing to make ends meet will reduce demand for OPEC crude. that petrol prices in Greece are set to match those in Britain, as the fiscally challenged Mediterranean country struggles to pay its bills. that is would build its new Nissan Leaf electric car at a plant in Sunderland, in the northeast of England, starting in 2013. The way petrol prices are going in England, orders for the zero emissions car should be brisk. Once again, through no fault of their own, OPEC oil exporters should not expect sympathy from angry British motorists.