Fuel Protests

Published on Mon 9th Jun 2008

Soaring fuel prices worry many people especially those in remote and rural areas but also local people who cannot easily get around on public transport. Some analysts think that the oil price could rise much further.

Britain still produces most of its oil (though we shall soon become importers again). But we are affected by international prices. Prices are being driven up by rising demand (in Asia) hitting up against limited supply. Supply is not expanding because of years of under investment when prices were low and also because of conflict (Iraq; Nigerian delta). Some geologists also say that we are near the peak of possible production. There is also financial speculation based on fears of worse to come (if Israel attacks Iran there would be massive disruption in supply).

Some newspapers are demanding that the government cuts fuel duty using the extra revenue from taxes on North Sea oil profits and from VAT on fuel. The trouble is that, overall, the government's budget is deteriorating. It doesn't have money to give away. Nor are there more easy sources of revenue. More taxes on the North Sea would be passed on to consumers or result in less movement.

High oil prices are also a painful, if necessary, way of discouraging fuel use to reduce our dependence on oil. Many people are, sensibly, switching to fuel efficient vehicles or avoiding unnecessary journeys.

Some fuel protests may be justified. The hauliers are right to claim that competing continental hauliers should not be allowed to dodge diesel tax on British roads. But, in general, there is no easy way forward. The days of cheap motoring and cheap flying are behind us.