Petrol Prices and Motorists

Written by Vincent Cable MP and published in Online Exclusive on Fri 13th Aug 2004

Rising world oil prices are, inevitably, reaching the petrol pump. The murmur of protest will rise in volume and there will be demands for price freezes or tax cuts to help beleaguered motorists.

I am a motorist, and value the freedoms which my car gives me. But I have little sympathy for fuel price protests. Overall, the cost of motoring has not risen in real terms (that is, relative to inflation) over the last 25 years and, despite tax increases, has fallen since the mid-1990's. Meanwhile, the cost of train and bus travel has virtually doubled over that time, and continues to rise sharply. People are being driven by higher prices off public transport onto the roads; not the other way round.

The UK is broadly self-sufficient in oil (and gas) - though not for long. It is worrying, nonetheless, that the world economy is so dependent on one major supplier - Saudi Arabia - whose royal family has an uncertain future. Until very recently my criticism of Saudi and other exporters was that they kept oil prices too low, not too high. Petrol prices were kept unrealistically low, ridiculously so in the USA - damaging the environment.

If oil prices remain at the present high level there could be an incentive to use oil more efficiently and consume less; the oil companies would seek to produce more outside the Middle East - in Canada, Venezuela, Russia and the North Sea; and other, renewable, fuels like solar power would be given a boost.

What the government should be doing is holding substantial stocks for an emergency and giving maximum incentive to fuel conservation and efficiency. Cheap petrol, however, is something which politicians can't deliver and shouldn't try to.