A reasonable observation might be that after a long period of generally rising prices, broken only by the 2007 crash, the tide has turned and petrol prices are falling. We have experienced a long period of broadly stable prices with steady downwards pressure.
In fact depending on which car I drive, the amount that I will save this year due to falling prices is somewhere between £250 and £400, which is not to be sniffed at. Clearly if you drive a sensible car the saving is smaller and if you drive further the cost is greater but the saving also higher.
We all know that Gideon Osbourne, our fantastically named chancellor of the exchequer, dips his paw into our wallets whenever we fill up. If we look at the price excluding the tax we can see that whilst the product price has fallen sharply, Gideon has managed to keep his share virtually constant at around 80p per litre.
He actually takes 59.75p per litre plus VAT. That's right, you are not misreading: VAT is charged on Fuel duty, a value added tax applied to a tax. Where's the value add in a flat rate tax? I am not sure!
Anyway, because the national statistical office gives us the data, we can look at the underlying inflation rate, both with and without Gideon's tax paw. When we do, we find that fuel product prices are now falling at over 20% per annum, but that pump prices are stickier and fall less rapidly.
Therefore, by far the biggest reason that the price of fuel at the pump is sticky, is because Gideon Osbourne and his chums at the treasury have held the tax at a constant rate (excluding VAT).
So when politicians next start to tell you that in "rip off Britain" it is oil companies who are holding prices higher, look again. It's not the oil companies that are screwing you, its the tax man who needs to generate a steady predictable flow of revenue, and gets it from your car.
The graphs supporting this are at my non-commercial no ads blog here: http://www.honestjg.com/2014/12/stic...ol-prices.html
In fact depending on which car I drive, the amount that I will save this year due to falling prices is somewhere between £250 and £400, which is not to be sniffed at. Clearly if you drive a sensible car the saving is smaller and if you drive further the cost is greater but the saving also higher.
We all know that Gideon Osbourne, our fantastically named chancellor of the exchequer, dips his paw into our wallets whenever we fill up. If we look at the price excluding the tax we can see that whilst the product price has fallen sharply, Gideon has managed to keep his share virtually constant at around 80p per litre.
He actually takes 59.75p per litre plus VAT. That's right, you are not misreading: VAT is charged on Fuel duty, a value added tax applied to a tax. Where's the value add in a flat rate tax? I am not sure!
Anyway, because the national statistical office gives us the data, we can look at the underlying inflation rate, both with and without Gideon's tax paw. When we do, we find that fuel product prices are now falling at over 20% per annum, but that pump prices are stickier and fall less rapidly.
Therefore, by far the biggest reason that the price of fuel at the pump is sticky, is because Gideon Osbourne and his chums at the treasury have held the tax at a constant rate (excluding VAT).
So when politicians next start to tell you that in "rip off Britain" it is oil companies who are holding prices higher, look again. It's not the oil companies that are screwing you, its the tax man who needs to generate a steady predictable flow of revenue, and gets it from your car.
The graphs supporting this are at my non-commercial no ads blog here: http://www.honestjg.com/2014/12/stic...ol-prices.html