for every 1p rise in petrol the government makes an extra £500 million pounds.
Based on a report from the Daily Mail? Fuel duty is a fixed sum per litre, it doesn't rise with the price of the raw fuel. The only increase in income for the government (whoever they may be) that is derived from a rise in the price of fuel is from the VAT. To make £500,000,000 from 20% vat on a 1p rise in price, the country would have to consume 250,000,000,000 litres of fuel. That's roughly 10 times the UK annual rate of consumption.
Fuel duty has been around for many years, what the Tories introduced last time they were in was the fuel duty accelerator, which automatically increased the rate of duty annually according to a fixed formula. I think this has now been stopped and any increase is calculated more sensibly now. They claimed it was a pollution control like Diesel duty but it very conveniently made the Government a lot of money from a product we couldn't really do without because they have never provided a sensible alternative.
I have an idea that I may talk to my MP about to allow public transport providers to claim back a large amount of their fuel duty, providing they spend it on new services and maintenance rather than dividends. It would make public transport a hell of a lot cheaper and allow providers to put more money into developing better services. I'm assuming they currently pay duty, I haven't looked into it yet.