Fuel situation in your area

all new Phil
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Location: Next door to Hell

Pete wrote: Sun 27 Mar, 2022 11.32
all new Phil wrote: Sun 27 Mar, 2022 11.25 100% this. Green policy is always easy to sacrifice as its impact isn’t immediately visible, and even if we have a government that does fully commit to it, another one will be along a few years later to reverse it.
I suppose its similar in that sense to the international aid budget. People say they want to have the money focused on helping people here (which it isn't, by choice) but not only do we not see where the money goes (only failed spending that the Daily Mail inevitably jumps on) but if you can help stabilise other countries, you reduce the need for economic migration of those people with less skills who may end up costing us more money here in the long run.
“BuT cHaRiTy BeGiNs At HoMe”
Thought this was a nice forum, clearly not.
cwathen
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Joe wrote: Sun 27 Mar, 2022 10.31 Are there not many ways that revenue could be generated and costs cut to pay for a lowering of fuel prices? Why have you singled out green policies as the answer?
OK so I let a week go by to see where the situation would go. And nothing has changed. Sunak's pitiful reduction in fuel duty has already been largely absorbed (not that it was much in the first place).

The problem remains that retail cost of oil and gas must drop significantly, and do so very quickly so that we get down the cost of energy, and down the cost of road fuel. Without it the cost of living crisis will only escalate. We are already in a position where people on low incomes have moved beyond worrying about their bills to knowing in advance that they simply won't be able to pay them. The knock on effect of that is that energy companies already know they are going to issue bills that won't get paid. Quite what will happen is unclear - and could easily become a spiralling circle if they then further increase prices to recover the cost of unpaid energy from those who are paying it, dragging more people into the position of being unable to pay. Road fuel continues to be between 40 and 50p / litre at retail more than has been the average for the past several years. Given the continuing situation in Ukraine it is unlikely to drop at wholesale any time soon. Even if you manage to absorb the cost of that to keep your car running, that is pushing up the cost of logistics which is pushing up the cost of everything. And even if you are well into a middle income you are still going to need to tighten your belt to afford the increases, that belt tightening is reducing disposable income which our battered economy badly needs spending.

However, we can't change the fact that oil and gas prices have shot up at wholesale. Therefore the only viable lever to achieve the kind of price reductions at retail needed in the - basically immediate - timeframe required are significant tax reductions. I believe we need to suspend VAT on all fuel and household energy products both to get prices down and also so that the remaining tax on fuel is paid per volume not per unit cost - for petrol at present that would immediately drop it back to being close (but still slightly above) the 2021 average price which would help immensely - and also review other taxes on oil/gas/energy products to get prices down, with any kind of explicit green subsidy being suspended entirely. As the cost of the raw product rises, more tax cuts to keep a lid on the retail price needs to be forthcoming. However, obviously if there is less tax coming in and the government isn't going to shore that up with more borrowing (which they probably aren't after spending two years crippling the economy whilst running up a £410 billion bill which apparently didn't require any sort of thought on impact before they did it because #'savinglives') then the only way to tolerate the tax cuts is to cut something those taxes pay for.

Why green policies? Because to me they're nice to haves which we fund when it's affordable to do so, they have value and importance but not to the extent that I'm willing to see large swathes of the country become destitute and the economic recovery slow over it. You may of course disagree fundamentally. But if we keep the green policies, then we cut something else. I'm clear on what I would be prepared to cut to fund big price reductions, what would you?

It seems to me that an awful lot of champagne socialists (and indeed, the current party in power claiming to be a Conservative government) are entirely prepared for petrol to continue to sell at £1.60 / litre and keep rising leading to the kind of mass ruination they claim to abhor before they ever admit that their obsessive support for Covid restrictions and all the gigantic levels of national debt and economic damage caused by them before they were prepared to let anyone die demonstrated a shocking lack of perspective which started this problem off, or that given how a bad situation has become even worse since late February we now need to take tough action which has to include cutting policies we can no longer afford in order to reduce the tax burden on fuel to get prices down.
Joe
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Joined: Wed 31 Mar, 2021 20.15

Nope, read that (and there’s a lot of it) through several times and still not sure why you’ve chosen green taxes.

Why not, say, a windfall tax on energy company profits?
cwathen
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Joe wrote: Sun 03 Apr, 2022 00.00 Why not, say, a windfall tax on energy company profits?
I did actually suggest that if it would work if you read my earlier posts. Not sure that it would though.

I think we are in a position where only dramatic tax cuts can deliver the level of price cuts to energy & fuel needed with the immediacy needed, which will involve cuts on spending. So again, if you're not cutting green, what are you going to cut? Something has to give.

I'll leave it another week then let's see where we are. I suspect no further on at all.
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Sput
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I’m not sure what outcome you want except that you’re now you’re feeling the downsides of the free market so you want some intervention?

I think doing as you suggest just amounts to faffing around at the edges. Those subsidies and VAT being removed would cost a lot and only take prices down to what they were a couple of months ago (I.e. still very high with potential to increase).

The free market doesn’t offer much for poorer people, but it very much depends on them showing up to work. Maybe it’d be better to “spend” the equivalent money to subsidise public transport and run more services in rubbish areas. Fares are appalling as a proportion of a lower income and both drivers and non drivers could take advantage.
Knight knight
thegeek
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Yes, which is why I suggested doing things which would reduce people's reliance on fossil fuels. I admit that not all of them are quick wins, but they're things we should have been doing anyway and need to be doing if we want somewhere nice to live in the future.
cwathen
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Joined: Fri 15 Aug, 2003 17.28

Sput wrote: Sun 03 Apr, 2022 09.22 I’m not sure what outcome you want
...the one I described? Cheaper fuel and energy bills funded by tax cuts?
Sput wrote:except that you’re now you’re feeling the downsides of the free market
Yes in the sense that it will affect me, but I'm fortunate enough that I don't have any gas in my property, my domestic electricity usage is quite low (especially now we're at the end of heating season) and so I can tolerate quite a jump in my bills in percentage terms without that actually adding up to a huge amount of extra pounds and pence. Petrol not quite the same situation when I'm driving 300 miles / week commuting but even then I'm not (at present anyway) in a position of being unable to afford it. Ditto increased food costs. It's not primarily me that I'm worried about here.
Sput wrote:so you want some intervention?
The problem has been caused because of interference with the free market by governments! Firstly shutting the world down two years ago caused an artificial collapse in demand which saw prices plummet and in turn production slashed and the reverse happening last autumn as demand increased before production was ramped back up causing a massive spike in prices which wouldn't have happened in the first place if we didn't have the intervention that caused production to be slashed. We can argue all day about the rights and wrongs of it happening, but it is still intervention which did it.

More recently that bad situation has snowballed into something worse as imports from Russia have been cut off causing a further massive spike in global oil & gas prices which again has been led by government intervention rather than the free market. Whilst cutting off Russia is absolutely the right thing to do (whatever I would do, I would not fund an unprovoked war by buying their oil & gas), the flip side is that when interventions like that are done a responsible government has to counter that at the other end by reforming the tax model in order to limit the increases at retail. Intervention to limit prices is not even new - the very fact that there is a price cap on domestic energy bills (although admittedly for many it will feel like having little utility right now) is intervention. It's hardly rejection of free market economics by agreeing that in certain circumstances intervention is the right thing to do, that's just an admission that it's not a perfect system which sometimes needs extra checks & balances - and that's true of any economic system.
Sput wrote:I think doing as you suggest just amounts to faffing around at the edges. Those subsidies and VAT being removed would cost a lot and only take prices down to what they were a couple of months ago (I.e. still very high with potential to increase).
It depends on what. Where I live the cheapest petrol available currently sits at 157.9ppl from a Morrisons forecourt. If there were no VAT on it then (assuming full pass-on of the savings - which I would say is more likely than not from a major supermarket) that immediately drops the price down to 131.6ppl, without any further cuts to fuel duty. That's pretty much the level that prices had settled at for much of 2021 prior to the increases of last September. Filter through a similar reduction on diesel prices which then reduce logistics costs and that would do so much not just to make it cheaper for people to run their cars, but to start to reverse the price hikes on everything that are coming through now.

Domestic energy bills obviously will not be quite so impacted with VAT at a much lower rate to begin with. They will need additional tax cuts, followed by a cut in the price cap to force suppliers to pass those cuts on.
Sput wrote:Maybe it’d be better to “spend” the equivalent money to subsidise public transport and run more services in rubbish areas. Fares are appalling as a proportion of a lower income and both drivers and non drivers could take advantage.
For myself, it would actually be perfectly viable for me to commute to work by public transport and I'd much rather do that than sit in a traffic jam twice a day - and I'd even be going green into the bargain. Unfortunately it would work out at £17 / day (or at least that's what it was last time I did it, which was before the recent rail ticket increases). Season tickets can reduce this cost, but not substantially so. Conversely even with petrol as high as it is, if driving economically I can do it for just under £10 / day and if road fuel does eventually drop it will get cheaper vs public transport fares which only ever increase.

So yeah, mass subsidies for public transport to get fares down and increase services, fine. Same problem though - how would you fund them? Their operating costs have gone up. They would need higher subsidies than they would a year ago. It all boils down to the same thing - nothing can improve until the retail price of fuel and energy significantly comes down. That's why governments need to use the levers they have available to them in terms of tax reform to make that happen.
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