Britain: Fuel Costs – Who’s Really to Blame?
The British government, oil producing countries and oil companies are all to blame for high oil prices, according to a recent UK poll.
With the government taking most of the blame (38% of those polled placed the blame on Whitehall), it seems that few people acknowledge the fact that increasing consumption of a finite resource sold on a volatile world market is the real reason for high prices at the pump.
Of course, taxation makes up a significant percentage of the retail price of fuel, which is something that governments do have influence over. To this effect, Conservative party leader David Cameron has proposed a sliding scale for value added fuel tax which decreases as crude oil prices increase, shielding the consumer from global oil market shocks.
However, taxation is ultimately irrelevant to the long term future of oil prices, as prices will inevitably rise as demand in an increasingly affluent world continues to outstrip increase in supply. It is in this respect that Western governments need to face up to the necessity of implementing long term policies to reduce and eventually eliminate the world economy’s dependence on oil.
Solutions for the future?
Reducing, or indeed increasing fuel taxes won’t achieve this, and neither will drilling for more oil or encouraging people to dive fewer miles in more efficient cars.
The only real solution is the development of technology that can offer similar practicality to fossil fuels and provide this to billions of consumers at a low price (in many places a pint of oil still costs less than a pint of beer), and this technology will only be developed and become viable as oil prices increase, letting the market do its work by reducing the comparable cost and risk of new investments.
Perhaps, therefore, the best thing that governments can do in this case is to leave the issue alone – governments have a poor track record in successful market intervention, with many current drilling and tax reduction proposals likely to only prolong the pain and increase damage to the environment.
The British are right to blame their government, although maybe we should blame them for doing too much, rather than too little?
Other posts about oil prices:
- “McCain Credits Bush for Drop in Crude Oil Prices, White House Basically Replies: ‘Wasn’t us.’
- “Bush Administration Proposes ‘Fire Sale’ of Rocky Mtns. For Oil Shale Development”
- “New McCain TV Ad Blames Obama for High Gas Prices”
Photo Credit: j-cournelius via flickr Under a Creative Commons License
