Treasury minister calls on oil companies to cut fuel price at pumps

[David Guyatt]

In theory, this is a good shout, as the oil price has plummeted (for geopolitical reasons) this year. However, what Danny Alexander is not saying is that something like 80% of the fuel price in the UK is the result of taxes. Maybe then he should kickstart the process and cut tax by 10%?

Cut pump prices, Danny Alexander urges petrol firms

Minister calls on petrol firms and supermarkets to combat the rocket and feather effect'

• Press Association
  
• The Guardian, Thursday 6 November 2014
  
• Jump to comments (113)
  

'
The public have a suspicion that when the price of oil rises, pump prices go up like a rocket. But when the price of oil falls, pump prices drift down like a feather'. Photograph: Nick Ansell/PA

Petrol firms and supermarkets are to be pressed by the government to pass on the benefit of falling oil prices to motorists. The chief secretary to the Treasury, Danny Alexander, will demand an assurance from fuel companies and distributors that they are doing all they can to cut prices at the pumps.
Brent crude slumped as low as $82 (£51) a barrel earlier this week, its lowest level in just over four years due to concerns about oversupply.
Alexander will say in a speech in Aberdeen: "Especially in the current economic circumstances, people would rightly be angry if they feel that pump prices don't fall as much as they should on the back of falling oil prices.
"I believe it's called the rocket and feather effect. The public have a suspicion that when the price of oil rises, pump prices go up like a rocket. But when the price of oil falls, pump prices drift down like a feather.
"This has been investigated before and no conclusive evidence was found. But even if there were a suspicion it could be true this time it would be an outrage."
The Liberal Democrat minister will say that he plans write to the industry's major players "seeking their assurance that they are doing all they can to pass on the benefit of falling oil prices as quickly as possible".
"When the price of oil falls, the public have a right to expect pump prices to fall like a stone, not a feather," he will say.
Highlighting the Treasury's action to freeze fuel duty, Alexander will say: "I have made sure over the last four years that government has helped with the cost of fuel. And when the oil price falls, industry must do all it can to help, too."

[Martin White]

Yes, tax on fuel is indeed the elephant in the room. What combines to make fuel more volatile (no pun intended) is the fact that any increase due to the price of crude is magnified by the 20% VAT.

The Green party would complain that it would be bad for the environment if fuel taxes were lowered. Well, to an extent maybe. Personally, driving is such a chore that I would not drive any more frequently or further, but I would have more disposable income to spend on other things, funding jobs and more taxation elsewhere. It would also lower the cost of things like food, and so the cycle grows. However, the Government will hide behind the Green argument, which they don't believe in, and certainly won't intervene to reduce the profits of the oil giants. It's just empty noise.

However, there is no doubt that we are being screwed big time by the fuel companies over fuel costs, and I am sick to death of hearing the Government rhetoric that every motorist is basically a hobbyist that doesn't really need a car. Public transport (a misnomer to start with since the Tories privatised that too) is non-existent in my area. Without a car I couldn't get to work, and neither could my wife.

Yet the companies always say "But we only make a small profit from selling petrol." Of course they do. That's because (I suspect) that their business is separated into the refining industry and the retail arm. The refining section of the business gouges the retail arm, who pass that onto the sucker, I mean customer. Then the head of the retail arm says "but we only make 1p profit per litre of petrol". As usual, it's the man behind the curtain (in this case the refiner and distributor) who is raking it in.

In fact, what really winds me up is the compound nature of tax. You earn money. It's taxed at source. You spend the remainder on food, energy etc, and those transactions are taxed at 5% (energy) and 20% for everything else. Then you put fuel (80% tax) into the car that you paid 20% tax on when you bought, to drive on roads that you pay £200 a year tax for. You pay hundreds of pounds to insure your car, including tax. Then if you have any money left after all this, when you die, your children pay 55% tax on it. Bastards. And even after all this, they can't balance the books because they're too busy starting wars all over the bloody place.

Rant over.

[David Guyatt]

The oil price is, of course, fixed by crooked companies that seemingly break the laws as they wish and are never properly held to account - other than paying the odd fine here and there.

[Martin White]

What if the MIC approach was double-barrelled? In other words, a perpetual war state guarantees defence spending, but at the same time artificially floats the price of oil by keeping military tensions simmering, causing "uncertainty" in the market?

This would mean that it's still "War For Oil", but not the way that we thought.

[David Guyatt]

Could be, but my expectation is that this low price is a temporary thing and will eventually revert back to the far higher price that we are familiar with.

The idea in the short term is to hurt both Russia and Europe.

[Tom Bowden]

I retired my car seven years ago and I live 10km from shopping area. Commute by bus and bicycle. I believe gas is the most taxed of necessary commodities. In some cases it is worse than so called "sin" taxes in USA.

[Magda Hassan]

I retired my car seven years ago and I live 10km from shopping area. Commute by bus and bicycle. I believe gas is the most taxed of necessary commodities. In some cases it is worse than so called "sin" taxes in USA.

Well done Tom! It is great to hear of people making these decisions. I'm probably going to build an electric car to get around this. Used have diesel and make and buy biodiesel from vegetable oil sources. I just don't want people dying for my transport or supporting those that do the killing even by proxy.