Don’t blame the oil companies for petrol prices – blame the government
Sean Carson explains why oil companies and retailers can't take the rap for inflated fuel prices
Potential price fixing by oil companies is nothing compared to the whacking great chunk of tax the government puts on a litre of fuel. Sean Carson explains why.
The Office of Fair Trading is to investigate whether the falling costs of a barrel of crude are being passed on to customers at the pumps, or if the major oil companies and supermarkets are simply manipulating and distorting the market in a price fixing racket.
To be honest, it doesn’t matter what the oil giants have done, are doing or will continue to do in terms of rigging the price of a litre of juice. It’s immaterial. The real people the government should be investigating are themselves.
Why? For extortion. The country is in the midst of a double-dip recession and we need centrally raised funds to pay off the nation’s deficit. The public can understand that. But it takes umbrage with the fact that we’ve been paying through the nose for our fuel – as a result of fuel duty – for years.
In the UK drivers pay roughly 49% fuel tax on a litre of fuel. On top of the actual cost of the fuel itself and then duty as well, we have to also pay 20% VAT, taking the total levy on a litre to a massive 64% of the pump price.
When you think that fuel expenditure accounts for five pence in every pound of household expenditure, it’s easy to see how much the government takes in tax from the motorist.
"There’s another 3p a litre rise in duty scheduled for January 2013"
Any collusion by the big oil companies in fixing the price of valuable hydrocarbons pales into insignificance next to the proportion of what goes straight into the government’s coffers for every litre of fuel sold.
There’s another 3p a litre rise in duty scheduled for January 2013 too, put off from the proposed introduction in August to give baying Brits some respite from perpetual rising costs at the pumps.
To some families, outgoings on fuel are already crippling, with many people falling into ‘petrol poverty’ – where individuals have to forgo family visits and days out because they can’t afford the personal transport costs. It’s simple, we need less tax on our fuel.
"A change in driving behaviour has been observed in that motorists are curbing the use of the car to save money"
The potential effects of lowering fuel duty could actually be beneficial to the government too. A change in driving behaviour has been observed in that motorists are curbing the use of the car to save money.
Lower taxes at the pumps and you’ll find that more people drive, and arguably use more fuel – the government could recoup some much needed money through volume rather than high taxation.
The general public might also feel like they’ve been cast a lifeline, with more disposable income to spend on other taxable items, such as holidays, consumer goods and plenty of other commodities that’ll boost the economy.
We need to think of the long term impacts - exactly what the government didn’t do during the boom time and why we’re in this mess. We need lower fuel duty now.
Follow Sean Carson on Twitter @Carson_on_cars
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OFT to investigate UK fuel prices
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