Why petrol prices are so high (2)

Nothing like a bit of scaremongering to sell newspapers...

I was horrified the other day in the supermarket to see this headline on the front page of the Daily Mail : "£70 to fill up with petrol: Families hit by yet another stealth tax and soaring oil prices."

Apparently this is due to the escalating price of oil (True - it hit a 27 month high of $98 a barrel this week) and George Osbourne's forthcoming budget increases.

This latter is patently untrue. Nobody, except perhaps the government's innermost circle, knows what's going to be in the budget. But this doesn't stop the Daily Mail. Oh, no! "Petrol retailers have written to George Osborne urging the Chancellor to abandon the next automatic ‘escalator’ rise in fuel duty in his Budget, which will see up to 5p a litre added to the cost of fuel."

At this point I would like to point out that the Fuel Price Escalator in question was actually abandoned in 1999. It is true to say that increases have been applied in sucessive budgets, but it is patently untrue to say that it is 'automatic'.

And the claim of 'up to 5p added'? Well, I take that with the same pinch of salt that I take when I look at adverts offering 'up to 50% off' because, let's be honest, bugger all is 'up to' whatever figure you want to highlight!

But this doesn't seem to matter to the Mail. "The cost of filling a saloon with a 50-litre tank will soar to about £70" Frankly, I don't think that will worry anyone who can afford a car with a 50 litre tank. I filled both my cars this week and neither of them took more than 36 litres. Still, it makes a nice soundbite.

But the thing that irritated me most about this piece of scaremongering non-news is the headline that describes this as a "stealth tax". I find it hard to understand how something that hasn't happened - much less been proposed - can be described as stealth, especially when it is trumpetted two months in advance on the front page of a national newspaper.

My conclusion must therefore be : If you want real news, then don't buy the Daily Mail on a slow news day...

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At last! A policy all the parties agree on...

The three main parties leaders issued a joint statement today having agreed to introduce a new 'Gravity Offset Levy" in the next Parliament

The leaders shake hands on their historic agreement
while demonstrating first hand the effects of their policy

A Bill will be introduced in the next Parliament which will prove that the UK leads the world in tackling environmental problems.

The statement said "We have complete cross party agreement to introduce a new Gravity Offset Levy which will enable the UK to reduce its gravity by 10% in real terms. Reducing our gravity in this way will have the following immediate beneficial effects :

• Vehicle pollution will be reduced as everyone knows that lighter vehicles use less fuel. This will also apply to aircraft and diesel railway engines.
• Lower fuel consumption also addresses the growing unrest over petrol prices
• Wind turbines will spin faster as the blades will weigh less, thus improving their generating efficiency
• Everyone will be fitter as less effort will be required to walk, run and lift things
• Our newborn children will be less obese, as they will grow taller and thinner
• Our cricket team will win more matches as they will be able to hit the ball further
• Productivity will improve as everyday tasks will require less effort

And all this can be achieved with a modest per house levy of only £5,000 per annum which will be automatically added to Council Tax bills. It will enable us to half the National Debt within the lifetime of the next Parliament without us having to make any cuts in public spending."

Gordon Brown commented, "This is such an obvious new tax that I cannot believe I never thought of it before" whilst David Cameron added, "It's a fair tax as it effects everyone equally and everyone gets the same benefit."

For the Liberal Democrats, Nick Clegg added "It's not a new idea. We proposed it in our last manifesto but we are pleased the other main parties have finally adopted it."

Of course, not everyone is happy. The Green Party dismissed it as just another stealth tax masquerading as environmentalism, and Weight Watchers complained it would ruin their business.

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Why petrol prices are so high

Today, petrol prices at the pump hit £1.20 a litre with a warning that it might hit £1.50 this summer.

Much has been said about the reasons for this, but here is the truth behind the main ones :

(1) Exchange rates : "The pound used to be as high as $2, but now its only $1.50" - True in it's own way, but not so long ago it was down to $1.15, so if the rate has improved, why have prices still gone up?

(2) The price of crude oil : "Brent crude is at a high of $86 a barrel" - Also true, but it used to be over $150 a barrel and prices weren't this high.

Strangely enough, one of the main contributing factors never seems to get mentioned : Tax.

In the last twelve months, Alistair Darling has added 6p a litre to your petrol bill - and that's without the extra 2p he's had to postpone until later this year in case it loses votes.

And, of course, let's not forget that there is VAT on top of those increases - so that's another penny....

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