[ UPDATE : The windfall tax on the oil and gas companies is going to amount to £2 billion, not £10 billion – and George Osborne is going to watch them “like a hawk” to make sure there’s “no funny business” and that they don’t pass on the cost of the tax to their vehicle fuel customers. Yeah, right. Like, when are people going to wake up and realise market tinkering won’t help ? We need “big number” public investment in sustainable fuels and sustainable vehicle technologies, not efforts to massage fuel duty to appease vocal petrolheads. ]
Let’s see now…how’s the price of a gallon of fuel today ?
Well, the fuel duty escalator has been scrapped for the rest of this UK Parliament.
Plus, fuel duty has been decreased by 1 pence per litre.
This will gladden the hearts of many who have campaigned against the scorching taxes on fuel costs to motorists.
But Value Added Tax for fuel hasn’t been brought down – because the UK Government said it would be illegal under EU law to cut VAT specifically for fuel.
None of these measures announced in today’s UK Budget will stop the price of vehicle fuel from rising further with the markets, unfortunately, so nobody who depends on their personal vehicle should be rejoicing.
The £10 billion or so that will be extracted from the North Sea oil industry via a raise in production tax (apparently to pay for cancelling the fuel duty increase) will no doubt be charged back out to vehicle fuel customers one way or another…the price of ICE Brent Crude for forwards contracts dipped a little today, but the average has shot up over the last 3 months.
Minor adjustments to the price of vehicle fuel will not resolve the fundamentals driving crude oil price changes – and hence the price of diesel and petrol and the pump.
The major shake-up in the price of crude oil shows that suggestions to tinker with taxes or levies to try to adjust consumption for environmental reasons will be a totally failed strategy even before it begins.
So why oh why has George Osborne instituted a Carbon Price Floor for electricity emissions in the power generation sector ? The “price signal” this is supposed to give, an “incentive” to reduce high carbon generation and invest in low carbon generation, will be totally lost amongst the increasing operating costs for electricity production – not least because nuclear power is about to get much, much more expensive because of the response to safety concerns raised by the Fukushima Daiichi Japan Nuclear Accident.
It is time to admit that green taxation doesn’t change behaviour because it is always small compared to other price effects.
It is also time to recognise that proactive investment in such things as low carbon fuels, vehicle fuel efficiency and small electric vehicles, small fuel cell vehicles, more public transport, lower driving speeds, fully inflated tyres, de-centralisation of employment and re-localisation of public services are key to tackling Climate Change for the transport sector.
So…how’s the Green Investment Bank shaping up, then, George Osborne ?