Thursday, July 03, 2008

U.K.Fuel Tax Freezes, but Rising Prices.

The price of fuel at the pump in the U.K. is the highest anywhere in Europe and this is making life very painful for all kinds of motoring particularly the haulage industry. The price of a barrel of Brent crude oil hit $145.11 on the Asian markets yesterday, and that $150 "sesquiennial" watershed before the feared $200 barrel does look imminent, although I had thought we would not see oil at $150 until the end of 2008. It seems, however, that oil prices are becoming less predictable beyond the reasonable expectation that they will continue to rise.

Yesterday saw a truckers' protest in London, but I doubt it will have any effect in reducing fuel prices. Into this tinderbox was threatened the spark of the government increasing fuel taxes by 2p a litre, amid urgent calls to reduce it. The Daily Express newspaper has been bearing a flag that fuel costs could be reduced by 14p a litre, but since this would involve depleting the chancellor's coffers at an especially demanding time - Mr Darling has already had to borrow over £50 billion this year - I doubt tax-reductions are feasible. It seems likely that the 2p tax increase will be stalled, which would amount to, pro rata, around £1 billion a year.

Even freezing this fuel duty will provide little balm for drivers, however, who are paying around 120p per litre of unleaded and 130p per litre of diesel, the latter being a tough outlay for haulage firms who use mainly diesel as a fuel. The price of oil has increased by a factor of ten over the last decade, has quadrupled since 2004 and doubled in the past year. There is now speculation that it will reach $250 next year, and that will increase fuel prices by around 60p a litre, irrespective of what the government does regarding taxation: the £2 litre is in sight, or $15 a gallon (U.S.).

We will face very difficult times, undoubtedly, and the only glimmer of hope is that new technologies will become "affordable". Put another way, the cost of oil will be so outlandish that other means to preserve as much transport as possible might appear less expensive: e.g. electric, second generation biofuels, hybrid (I am leaving-out hydrogen/Fuel Cells for the moment since this technology is years away and poses a chain of technological challenges to be surmounted before it can really get anywhere) and probably most viable, fuel-efficient engines.

Meanwhile, the airlines easyJet and BMI have told their pilots to fly slower since this uses less fuel. I believe there is a technique that can be used at altitude, which is to lower the wing-flaps so that more lift is obtained, and hence less fuel is required to keep the plane airborne at a reduced velocity. Simultaneously, train-drivers have been recommended to switch off their motors and coast downhill at suitable points, and bus-drivers to "travel smoothly" to reduce the amount of fuel required per journey. The price of a litre of diesel is forecast to reach £1.50 this summer.

Energy efficiency has to be the way forward, but wrapped neatly in a whole reformed manner of living which is simply less transport intensive overall.

Related Reading.
[1] "Fuel tax revolt." By Andrew Grice. The Independent, Tuesday 01, July 2008.
[2] "Airlines tell pilots to slow down as fuel prices hit record levels." By Sophie Borland.
[3] "14p a litre off petrol: it can be done." By Louise Barnett. Daily Express, Monday, June 30, 2008.

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