Power of the pumps
From time to time, intriguing polls make their way into my inbox. Today, the AA has sent me the results of a poll of their members. Two-thirds of them say that they'll vote for a different government if the price of petrol rises above 125p. And almost half, 49%, say that the government is most responsible for the rise in the price at the pumps.
No wonder Gordon Brown made the effort to go to Jeddah at the weekend. He was rewarded with a small increase in the supply of Saudi oil, and some of the best news coverage that he's had in weeks.
No wonder too, that David Cameron hinted, at his news conference yesterday, that the Tories would find a way to, in his words, share the pain between the government and the driver the next time fuel prices rise. He hasn't spelt out what this means. Perhaps it means that he will plan a petrol fund, paid for from duty rises that then can be paid back to the tax payer in the form of tax cuts if the price falls later on.
PS. My story on Alistair Darling's fate caused a flurry yesterday, and a flurry of different newspaper interpretations. Read the Guardian or the Sun and the chancellor is safe in his job.
Read the Telegraph and you're told he's not.
Read the Times and you're told that the Downing Street machine has not quite managed to put to bed rumours of Mr Darling's demise.
I'm 
© MMIX~RS~q~RS~~RS~z~RS~04~RS~)
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Make no mistake; everything Gordon Brown touches turns to dust.
This latest attempt to 'control' oil prices with 'intervention' is doomed to failure.
You can't buck the market said an ex-leaderenne.
Sadly, 'control' is the Brown doctrine and it's doomed. It's becoming increasingly clear the man is an unreconstructed communist.
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Nick,
the power of the pumps is an important measuring stick, in the future leadership of a country.
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I think most people could stomach the level of taxes on fuel, as long as they weren't also being clobbered on everything else too so badly.
The problem is that the tax burden generally is so regressive and huge that the tax on fuel knocks a lot of people over the edge, so the price at the pumps is a yard-stick on how high our taxes are generally, and that's what's really annoying people.
Personally I'd rather see a general shift away from regressive taxes rather than just targeting one specific tax such as fuel excise duty, because some people who don't have a car are still badly hit in other ways (council tax etc).
Upshot is (in my opinion) - let people keep more of their income in the first place, and then let them decide where to spend it, rather than trying to micro-manage people's spending habits.
I don't like the idea that the government should be telling me what to spend my money on; just let me keep more of my money in the first place and let me decide where to spend it, and don't try to force me to beg for some of my income back via tax credits.
So, reduce regressive taxes generally, and get the money from some other fairer way, such as income tax threshold tweaks/pcts and/or saving on government waste and/or by increasing the ability of UK companies/people to profit by eliminating red tape.
Reward people for success rather than killing them with taxes whenever they create a profit for the UK or generate new jobs.
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Really, we've got nothing to offer the arabs in return for their cooperation.
If they significantly lift production the price will drop, their only asset will run out faster, earn less money and they'll be worse of at our expense.
If however, they leave things largely unchanged, their revenues increase, their fields will last longer and they'll be better off at our expense.
If we slip into recession, things will be even better for them as we'll use even less, the price will rise even more and they'll be even better off for much longer.
God forbid the US/Israeli alliance attacks Iran, the arabs will really be coining it in then.
It's a no-brainer really. There is no advantage to the Saudis in depleting their fields faster for less money. Nor is there any mileage in asking them for 100Bn to fund nuclear power stations over here. Not unless we're prepared to pay interest rates that compensate for the use of less oil AND agree to the transfer of nuclear technology to the Gulf.
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An AA survey says that drivers SAY they will vote for a change of government. if prices go up. What a suprise!
David Cameron jumps on the fuel price bandwagon with vague nonsense about sharing the pain between government and the Motorist.
RobinJD @1 So you think that the leader of NEW LABOUR is a communist? I think that says more about your politics than his.
New Labour is Conservative with a hint of socialism. Like that flavoured water.
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Let's face it Brown is doing quite nicely out of these petrol hikes. He can't afford to moan too much otherwise he'll actually have to do something about it (like cutting fuel duty) We might not be in such a desparate position now if we'd have had that cheap integrated transport system they promised. Remember those wild days of New labour policy initiatives on transport?
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The trip to Jeddah may have given Gordon some positive headlines for the fact that he actually did something. The fact that the 'something' he tried was always doomed to failure is only beginning to filter through the media as he announced that prices should come down, and then they went up.
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So, Mr Bean goes to Jeddah pleading for lower oil prices and, guess what happens...up they go. Entirely predictable, given his ability to turn to dust everything he touches.
The only way our control-freak 'PM' can influence petrol costs is to return some of the huge fuel tax windfall his 'government' has received from the 20%+ increase in pump prices during the last year alone. Given the outcome of his years of 'prudence' - the catastrophic debts incurred that now must be serviced - this is a likely as the survival of a snowball in the Sahara.
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Am I being Dense or does the creation of oil take a fair bit of time from ground to petrol?
Plus as Redlenin states why would the arabs care? Also we surely wont be in their good books accusing them of partaking in Fraud.
I think Gordon Brown tries to please everyone and please nobody.
I think the following saying should be explained to him.
"The man that chases two rabbits end up with neither"
Put simply stop chasing headlines and focus on policy.
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@4 RedLenin you have got supply and demand the wrong way round:
"If we slip into recession, things will be even better for them as we'll use even less, the price will rise even more"
If we use less, then the demand is lower and the price falls.
This is why the chinese are increasing the price of petroleum products, to dampen demand. Other than that, you are correct.
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Brown is a terrible ambassador for this country. Is there nobody else we can send in his place to negotiate on our behalf?
Actually the whole Labour party are terrible representation of this country... if I was dealing with them I would also put the price up!
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News just in!!! Uncle Gordon and the rest of the cabinet have decided (i won't use that awful word pledged ) to use national express coaches for their UK travel from now on. 'we have a duty,' he said, 'to downsize (yuk another management word) our transportaional requirements going forward (yuk again), so I and my cabinet, will in the future, sometime soon, well maybe if we can get around to it, errrmmm, oh nevermind. Let's just say we intend to do something about whatever needs doing errmm on national express thingies.'
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Bless him. He actually still believes he can do something. Still trying his 'outmost' still failing.
Must be rather depressing being NewLabour, NewCommunist right now. It's all going a bit Pete Tong.
Can't wait for the next keynote five year plan. Give me some targets. hospital beds up, school standards down. Universities not delivering. housing market collapsing. Social disintegration. Socialist dogma.
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A few facts:
1) As over 70% of the price of fuel at the pumps is duty, tax (and VAT on top), the price that we consumers pay is unrelated to the price of crude oil. The price of a barrel of crude could jump to $200 and it would still be cheaper than what we pay at the pumps if we weren't being fleeced by the government.
2) Every time the price of crude oil rises, the Treasury benefits as the taxes rise too.
3) The Government has no contingency or reserves (for a 'rainy day') as they are totally committed to spend every penny. Any contingency they did have - they've wasted (£2.7 billion here, £300M there for DUP, guarantees for Northern Crock, etc.) - so they can't cut duty without someone somewhere feeling the pain....
4) The Saudis must have been embarrassed to find Gordon prostrating himself before them begging for crumbs and offering ridiculous favours in return ("help us invest in technologies that will make your sole product redundant - then you can go back to herding camels in the desserts of Arabia..."). Hmmm, on the other hand, they probably enjoyed it.
5) This talk of replacing Darling is all Balls.
(OK, No. 5 is a guess rather than a fact, but still more credible than anything that ever comes out of No. 10).
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Only charging VAT (that's Value Added Tax) on the cost of petrol/diesel and not on Fuel Tax (that's taxing the tax as happens now) would be a good start in reducing fuel prices.
And of course, the Value Added Tax you pay on the Fuel Tax comes from what you have left after paying 20% or 40% tax on your income.
Tax on tax on taxed income. Come on, Gordy, give us a break.
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13 RobinJD
Re the 5-year plan, where are the Tractors?
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News just in!! Leaked policy document form New Labour HQ.
A STATEGIC PLAN FOR REDUCING THE POLITICAL DAMAGE OF PETROL HIKES.
DAVID MILLIBAND.
First option: do something (anything will do)
Benefits: We look better and the public will love us again.
Second option: Do nothing, but appear to be doing something.
Benefits: Makes us 'look' positive, confident and in control.
ASSESSMENT
If we really do something (like cutting fuel duty)we'll lose a lot of money to spend on many of those loony tune initiatives we want to progress going forward. So not an option. If we do nothing we might look positive but, if it goes belly-up, we'll be perceived as weak by the public, well, I won't, Gordon will actually, and then, well, you know, it'll be good for me, if he goes that is. Mmmm not such a bad idea then, so, conclusion: Carry on as normal and do nothing.
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@10 - On the contary. They control supply and as a result control price. If we slip into recession and use less, they will up the price to compensate.
The natural laws of supply and demand don't apply in this case, nor as we are now finding out, do they apply to natural gas either
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I wish somebody in Government would trouble to sit down with an expert or two to analysize why the oil price continues to rise.
Going to Saudi Arabia and wagging your finger at members of Opec and insisting on increase production is not the answer.The answer maybe is to understand that there is not a shortage of oil against demand but a shortage of high API grade oil
(thin oil) that is required to go through the refineries,who dont have any spare operating capacity,in order to produce the high end fuels for aircraft ,motor vehicle etc. that are in demand.
So the refineries want light crudes only to maximize their profits and avoid refining unwanted tars and bitumins.
So unless increase production is light crude only increase in production across the board wont make a scrap of difference to the price.
The pity is that the problem actually eminates from the USA where refining capacity outstrips demand and they are relying on imported crude to refine for fuel to run their airplanes and cars.
The other issue is the role of the speculators ,who are speculating on the prices of light crudes that are in demand dragging the heavy crude and ironically the gas price(tied to oil price) up with them.
There are control mechanism available in the financial system where speculators behaviour could be better controlled but for some reason that escapes me the controls are not being implemented.
So until production of light crude,and not a mixture increases there will be no chance of a price reduction
So if Mr Brown is genuinely concerned about the cost of fuel to the public then he needs to reduce the tax.-not likely though.
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Diesel was about 100p a litre just before Christmas and is now 130p a litre.
Fuel duty is a static 56p so the difference on the VAT means that the government now takes an extra 5 pence per litre in revenue.
Not to mention the the increased income from north sea oil due to the rise in crude.
Gota pay for those Quangos some how I guess.
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Scepticmax@14
"....4) The Saudis must have been embarrassed to find Gordon prostrating himself before them begging for crumbs and offering ridiculous favours in return ("help us invest in technologies that will make your sole product redundant - then you can go back to herding camels in the desserts of Arabia..."). Hmmm, on the other hand, they probably enjoyed it......"
INVESTING (that means providing money to get more money in return) in renewables. Would be an alternative income for the Saudis who are facing the prospect of the oil running out. It is not competition. Demand is so high any less oil we use can be sold elsewhere as demand outstrips supply.
I think that if you got what you wanted. No tax on fuel. Prices would still end up as high as they are. Only they would be profit. or motorists would be spending just as much wasting petrol sitting in traffic jams. also think of the planet man. it would just be one more step to environmental oblivion.
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@19. Having read a huge amount of stuff about Peak Oil over the last few years, that is a spot-on analysis with one exception.
There is another thing that could be done to alleviate and that's building more refinaries. However they take approximately 10 years to build and bring on-line. In addition, the oil companies have now realised properly and in full that their business is centred on have finite resource and there are going to be increasingly difficult and costly factors affecting it's extraction, so it has become in their interests to hold the price up as much as possible as long as possible and take as much money as possible for as long as possible before:-
a. It runs out or becomes to costly and difficult to find/extract.
b. Some smart-alec ruins their party by perfecting cold nuclear fusion.
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So when our beloved leader kneels before The Crown Prince of Saudi Arabia and pleads for increased production so that his most precious and limited natural resource will be cheaper for us Brits.
Knowing that fuel actually only costs 54p before tax and 130p when taxed to max.
Whats he gona say ?
Yep that?s what Id say too.
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Today's news is the cabinet are not going to take their pay rise if they were paid on results they owe us .
To talk about pay restraint is b....ks, I challenge any member of today's cabinet to live on £6.50 per hour of course they and the MPs get expenses to buy rugs, TV , furniture, etc the time is coming for the little man to stand up and their are millions of us and we will win eventually.
Fuel, Food and Housing are the basics of life .Gordon , Alistair , Jack, Ed you got to go now.
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As the underlying price rises tax should be lowered to keep the price burden constant
obviously after 10 amazing years with an economic genius running the economy the coffers will be overflowing to allow this
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Removing or lowering taxes would achieve diddly-squat. The oil companies/garages etc would just add it back in and the price would remain the same.
That could only be stopped by heavy regulation of the markets. I believe that's more commonly known as state socialism.
This is not a problem of taxation, it is a problem of the markets behaving exactly as markets are supposed to do, yet capitalists - who claim to support markets - whinging about the consequences and the impact. In short not only trying to have their cake and eat it.
The days of relatively cheap fuel are over. Get used to it, we are rapidly advancing to an age where we will have a standard of life roughly equivalent to the late 60's/early 70's.
I live 400 yards from where I work. I visit the shops after work. I use very little electric and gas - combined less than £50 a month. I haven't owned a car for over 2 years and I live in a rented house that is just big enough for me and the wife who also works where I work. We earn 28K gross a year between us.
I used to be self-employed, business, over a grand a week in my pocket living the high-life, shiney black BMW, the works. I saw all this coming 4-5 years ago. Credit crunch, peak oil, the works. It was blatantly obvious, it's just that people refused to accept what they were told. Ladt summer Bears-Stern etc were saying oil would break 120 dollars a barrell by easter this year and continue to climb, possibly briefly nudging 150 dollars by summer's end. So why has it come as surprise that it's done exactly as thought?
It will be 250 dollars a barrel by the end of next year. Get used to the idea.
I adjusted ready for it and here it is.
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I was actually pretty disgusted that Brown went to Jeddah 'cap-in-hand' - how many more favours (eg - allegedly dropped prosecutions) do we now owe the Saudis?
(Moderater, please note that I have made it quite clear that there was only ever a hint that the al-Yamamah prosecution was dropped - no concrete proof).
And for what? For a very slight increase in production which probably is nowhere near what's needed to keep up with a month's increase in Global demand.
Cameron, well, am I the only one that wonders what the Conservatives actually stand for these days?
Perhaps they're just waiting for the Liberal Democrats to come up with their policy so they, errrrrrrr, borrow it? Maybe Vince Cable is on holiday. (Moderater, please note that I said borrow - something that political parties like to do with good policies these days).
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Post 26 Red Lenin
Glad you have crystal balls pity Bears-Stern didn't.
Fuel is not expensive its the taxation on it that makes it expensive or are you too smug to notice.
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Nick
What do you mean IF the price rises above 125p, There are a lot of areas in this country where the price is already above this mark.
You need to get off the westminster lawn and have a look at the world outside.
What kind of majority would the conservatives have by polling 66% of the popular vote? 150-200 majority?
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#20 RussellHolmstoel: "Diesel was about 100p a litre just before Christmas and is now 130p a litre.
Fuel duty is a static 56p so the difference on the VAT means that the government now takes an extra 5 pence per litre in revenue."
It's obviously (IMO) not worth responding to most of the un-evidenced vitriol on here, but this one made me smile a bit. IF the facts stated are correct (and I have no idea whether they are) it means that the price has gone up by 5% because of the Government, and by 25% due to factors outside their control. Doesn't it?
Just one more little fact, and an opinion - the Government has not been operating the fuel price escalator (introduced by the Tories, and quite right they were too) for some years now; and the Treasury can't start to think about giving back any of the price increase 'windfall' until they see what effect the price rise has on the economy, and subsequent tax take. They could just stop all road repairs and withdraw all the subsidies on commuter trans to allow them to cut fuel tax, of course.
Stand by for ritual comments about 'cutting waste'.
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I'm an AA member. Have been for 44 years. Why didn't they ask me?
Oh, I see. It's not a 'scientific' sample poll at all, but the views of those members who feel strongly enough to sign up. A skewed result was guaranteed, which presumably suits the AA just fine, but I would have expected you to have looked at the provenance of these opinions a bit more critically, Nick.
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@28 - And if you lower the taxation but demand remains the same the retail price will stay the same because the wholesale price will just go up. Only an idiot would sell something for a fiver when people will pay a tenner.
Reducing taxation will not affect the price at the pump. As the tax drops the oil companies will raise their slice. you'll end up paying the same and the government will look at something else to tax to make up for the reduction.
And as for being smug, I chose to listen to economists about the economy and economics as opposed to listening to politicians. There's nothing smug in that, in fact I find it incredible that people believe politicians understand about economics.
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@18, RedLenin,
Ah yes, how remiss of me. The oil market is a cartel and does not work to the normal rules of supply and demand.
Actually the people making the most money out of the current situation are not the oil companies, although they are making record profits. No the people REALLY raking in the cash is the world bank and the IMF who are the middle men and go betweens between the oil producers and the oil producing nations. The bankers are fleecing us all.
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One bit of press I saw yesterday were graphs showing that there is almost zero difference between 'actual production' and 'production capacity'.
i.e. Gordon can't flood the market with increased supply. This is just a pubilicty stunt.
Still - it does make a change to see Gordon looking more statesmanlike than his usual rabbit in headlights mode.
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dhwilkinson @21:
Saudi Oil will not run out for some decades to come. Besides, would you 'invest' in Brown's Britain? The Saudis have invested - and will continue to invest - in British private sector assets, un-linked to government meddling.
They do, of course, have other 'investments' in our government in the form of Al-Yamamah and other shady deals.
The notion (also shared by Red Lenin@22 and elsewhere) that if tax on fuel was reduced then the nasty oil companies would raise their prices to 'fill the vacuum' and shaft us instead - is blatant stupidity that demonstrates a total incomprehension of market forces.
We have a choice of from whom to buy fuel. If it's expensive at one supplier, then we'll go elsewhere. (We don't have a choice of a more than one government - alas!).
As for 'environmental' concerns: sure, it's a good idea (medium to long term) to wean ourselves off oil. But as for punitive measures aimed at 'adapting my behaviour': I wish that we Britons had the right to bear arms - we'd soon demonstrate to our overbearing, nanny government how they ought to 'behave'. These people obviously forget that they are here to serve us, and that we pay their wages and over-generous expenses.
Oh - and don't ask me to worry about the 'planet'. It's doing just fine, thanks.
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Well done Red Lenin for bringing real economics/logic into the debate (no, that's not supposed to sound patronising, I genuinely mean it).
I'm not an expert, but I did do A level economics at school so know the basics (which is more than Brown seems to know).
In my humble opinion your points raised so far all make sense to me and are sound.
I studied lots of theories at school when it comes to economics (yes, there is more than one theory, despite what Brown thinks), and it seems to me that Brown/Labour have been using all the theories which were proved as being mad/wrong over 50 years ago, rather than the ones which made sense, and that's why I get so annoyed with Brown/Labour; that anybody who's studied basic economics (or even just has some degree of common-sense) could do better than them.
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Scepticmax @ 35 - You don't have a choice about your oil supplier. Most oil comes via OPEC and they are a protectionist cartel. The wholesale price is by and large set by them. If the barrel price goes to low for them they lower production, if it goes to high they raise it. If it's in an area they are comfortable with they leave it alone.
The retail price is set by the oil companies. They will charge whatever the market will bear. If they think that thay can get away with a tenner a gallon then that is what they will charge.
Because right at the start it's controlled by a cartel, then the consumer isn't really a free market consumer, they are just a tied in user.
A similar set-up is brewery tied houses in the pub game. No matter whether tax goes up or down, or wholesale prices go up or down or consumption goes up or down, the price at the beer pump in a teid house is dictated by protectionism.
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In my opinion, Red Lenin's right, in that the normal rules of supply and demand don't apply 100% to petrol/oil prices. It's hideously distorted by a number of factors.
Yes, supply and demand rules will apply, but a lot of their effect will be negated/opposed (or enhanced depending on which way you look at it) by the other factors that Red Lenin mentions.
There isn't a 100% single cartel, but there is a very distorted market, which is made even more distorted by speculators (private and governmental)
As per Red Lenin's postings, another analogy would be BT's pricing of their fixed landlines which they lease to other phone companies; BT charge what the market will bear, and the "competition" doesn't really have a say in it.
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How much of the fuel price is the result of speculation? On radio 4 this a.m. I heard some US pundit claiming half was (something I have been saying to anyone who will listen for some time).
Financial bubbles burst as all bubbles do, but the 'synthetic financial instruments' 'created' a huge bubble in money supply and this is now feeding through to inflation like it or not. There is no other way to absorb the excess cash.
It is unfortunate for us that our pay and pensions will not be allowed to rise to pay the new price (if the government has its way and unless your are a tanker driver, or civil servant.)
We will inevitably react by changing our habits to accommodate the price - change to more fuel efficient cars etc. - if we have the capital to do so. (In the next decade 70 mpg will become the norm!)
This may appear to be good for the environment but if it will reduce the effects of climate change I have my doubts (as a scientist and looking at the numbers). It is already beyond our control (if it ever was) and the best strategy is to roll with it and move to high ground!
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Oil price shouldn't be an issue (increasing global production isn't as easy as just asking Saudi for more - with oil at $100 plus every oil man out there is producing as much as they can, believe me), but politicians and the media insist on keeping it high on the agenda. Politicians so they can appear to be doing something on the world stage, media so they don't have to think to hard about real issues.
It IS important, and will harm the economy and individuals, but GB has NOTHING to do with the oil price. We could have invested more in alternatives, we could have done lots of things, but that is the beauty of hindsight. Holding him responsible is just bundling oil with all of our other frustrations - many of which are really his fault.
No-one saw this coming. Not oil producers, not governments, not consumers. If they had we wouldn't be in this mess. Anyone who says they did is lying or was really lucky.
Please Nick, give us all a break and inform people rather than perpetuating these falacies.
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re 40: ah, very true I think.
The trick would have been for brown to have said "ok, fuel's a bit expensive, and it looks like it'll probably stay that way give or take a few pence, and that was unexpected, so let's tweak the tax system a bit and try and ease the pain for you by, say, increasing the tax thresholds so you only start paying tax when you earn over, say, 8grand, and we'll pay for that by the extra vat receipts on fuel and various other things [too many other potential ways to do this to mention here]"
But, he can't/won't do that because he's got no spare money and has absolutely no idea what he's doing.
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No 3 getridofgordonnow
"just let me keep more of my money in the first place" by reducing the basic rate of income tax to 20% has Mr Brown not done this?
Would those who want a reduction in fuel duty/tax please say which other taxes they would increase or services they would cut.
Me I would cut the number of doctors, nurses, policemen, and teachers down to the levels of the last government.
I would then stop all transport subsides, fares would at least double, but as I don't use the train/bus there's no problem.
Next I would stop subsides to the arts. How many would attend these events if they had to pay the full price. Let artist get real jobs and stop sponging off the tax payer, that would stop the rubish that's protrayed as art these days
Summing up, I want the government to stop paying out on services I don't use and, increase spending on the ones I need.
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comment 13 had me laughing.
"Can't wait for the next keynote five year plan. Give me some targets. hospital beds up, school standards down. Universities not delivering. housing market collapsing. Social disintegration. Socialist dogma."
- ironic i thought. accusing labour of dogma, when everybody knows that labour for the last 11 years have been anything BUT dogmatic, not to mention how dogmatic that paragraph is! hardly a fair and reasoned interpretation of the last 11 years me thinks
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The onerous taxation on petrol and diesel neatly illustrates long standing Government dishonesty.
I am very keen on hypothecated taxes - this means that when a tax is raised on something, then it is spent in that sector.
So, if taxes are raised on fuel then broadly speaking the revenue should be spent on transport infrastructure.
However, politicians mostly seem to hate hypothecated taxes ... and if you think about it for a moment, the reason becomes obvious.
Politicians love spending taxpayers money, preferably on their own 'pet' projects.
So they want to see the revenue go into a general 'pot' which they can then dip in to fund whatever takes their fancy.
Government honesty and taxation are sadly poles apart.
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Ref 30.jimbrant
Jim
Stand your men down sir no salvo due today.
Yes you are right, it?s a simple calculation, its the Vat element on the increase. (33p today at my local garage) And your other calculations are right.
I also agree most of the recent price rise has nothing to do with the government. Speculation, shortages and fear would be my guess? But its not my field.
I merely sought to point out that the government is gaining huge amounts in extra revenue as a result of this rise through VAT and the N Sea.
If GB merely ring fenced this extra money for research and development of alternatives he would leap in my estimation. That would be some real prudence.
But you know that isn?t happening or going to happen, its going into the general coffers to fund the potato council ?. Opps sorry those darn guns have a mind of their own.
The government doesn?t really have to wait to see how its going to affect the economy does it, they have models galore they can run and we can see it.
They could quite conceivably give road hauliers and business users a small rebate to counter the effects on inflation though.
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#44 JohnConstable "However, politicians mostly seem to hate hypothecated taxes ... and if you think about it for a moment, the reason becomes obvious."
Indeed it does. If we followed your advice where would we get the money to pay for pensions? Or the NHS? or Education? or the armed forces? Or the police? There is no, or very little, money to be raised from those sectors, so any government has to move money from areas that are revenue raising to pay for them.
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#45 RussellHolmstoel: "The government doesn?t really have to wait to see how its going to affect the economy does it, they have models galore they can run and we can see it."
I don't agree at all. Economic models are not perfect at fortune telling, and in this case the unknowns would be so significant that you would be at huge risk of spending money you don't in the event get. Darling has said that he will wait until the autumn when the picture will be a bit clearer to decide whether there is any overall 'windfall' to spend before he actually decides how to spend it. Seems eminently reasonable (even prudent) to me.
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Nick, you say that Cameron HINTED, NOT COMMITTED, NOT SPELT OUT, PETROL FUND.
Nick, does that mean that Cameron will get rid of the Tax Credit System which helps the ones in need? If this is the case, if say for example a couple on low income, both in work and unfortunately one of them is made redundant, they will not get any help with reduction in tax, but they would receive help under the present Tax Credit regime. So according to you Cameron will be racking it.
The other question is. Does your assumption mean that he will be adjusting fuel tax according to the fuel price on a daily basis, because he needs to have at least a steady flow of income into the coffers, to continue with Labour's proposed future spending as promised by Cameron on various occasions?
What happened to the green agenda, Nick? The green lobby is saying that the hike in the price of fuel is a God send as it is making people change their habits and also reduce CO2. In actual fact CO2 had gone slightly down during the last two months.
This morning there was an interesting discussion on radio 2, as to whether people who work, would either prefer to tighten their belts and save their jobs and roofs over their heads, or go for an all out strike to make their employers and the Government for higher pay packets. Amazingly enough all the callers but one agreed that they do not wish to go back to the miserable days of the 80s and 90s, when such increases in slowing economies resulted in massive unemployment and very high interest rates. The person that disagreed was a lady who works in the public sector and she said that we would have wages inflation ONLY if the private sector ask for more pay rises, but that we would not have self inflicted inflation if the public sector ask for higher wages during a slowdown.
As an ex Bank Manager, I am aware that I would get more economic sense from my mover in the shed then from this lady that called BBC2 to put forward her idiotic theory about inflation or the causes of inflation.
Good night Nick.
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Without wanting to point fingers, there is this wrong idea that unless this Government proposes saving money then it can't be done, otherwise it would have already done it. And only its allocation of spending and spending management is the best way. But hold on a minute, every year the Government delivers a budget. It raises personal allowances, occasionally adjusts tax bands upwards, and offers tax incentives here and there. Every year the tax structure changes. It may privatise things (Air Traffic Contol, Qineteq), or sell Government services (Companies House data, DVLA data), it may raise some taxes, it may benefit from an increased tax take because of increases in GDP, etc, and it may make efficiency savings under the Efficiency Agendas that continuoulsy operate in central and local government - there's a whole load of ways in which money is raised - or saved and this is a continuous process, day in day out.
Take a look at the publicly available National Audit Office reports (ie the reports that focus on Central Government spending) and those of the Public Accounts Committee and and take a look at what the Audit Commission thought of financial management in the NHS then can anyone say, with hand on heart, that only this Government knows best on how money can be allocated.
There isn't a scientific school of Government spending; there is no one way that fits best. There is the possibility that someone else in Government may make a better job of it.
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15# Mikepko
I don't think this is the first time you've brought up the tax on tax arguement Mike and as before imply that this is something new (or should I say Nu on here) and one of Gordons Stealth Taxes.
I guess you know perfectly well that the way of taxing fuel is unchanged under Labour i.e vat on fuel duty. The only change is removal of the escalator which if kept would have led to even higher prices at the pump.
Its this sort of pernicious insinuation, known not to be true by the author (ie YOU) which devalues these sort of blogs.
Either that or you simply don't know what you're talking about. Which is it?
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49# Terry
Glad you brought up the publicly available NAO data and Public Accounts committee,
This nicely blows a hole in the oft quoted myth that the Tories cant talk about their economic policies till "they get to see the books" when in power.
What Garbage (not you)
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42# Anthony
Well said and of course sums up many on here.
However you should have wound up with something similar to JimBrant at 30# ie
"Stand by for ritual comments about 'cutting waste'".
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#51 Thanks for not calling me garbage!
Although the central point of my comment was that the Government can't claim to have a special hold on what is the right or best way to raise and spend money, since the reports I refer to relate to the past spending and financial management, and not the future.
The only thing of contention I'd add is that right up until the general election of 1997, Tony and Gordon's constant refrain was they they could not comment on their plans because they need to see the books. I still think there is some merit in that argument.
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#53, sorry one clarification - that Tony and Gordon could not comment "in detail" on their plans ... They were of course able to provide broad principles in relation to what people should expect of them.
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Ref 47 jimbrant
No ok models arent perfect, but I think most economists will tell you that fuel will increase even the governments own rather narrow measure of inflation as fuel is factored into everything we consume one way or another.
Some business?s are on their knees, some trawler men for example have just tied up their boats, and have given up. Im not proposing across the board cuts in fuel prices, just a few strategically targeted rebates to key businesses.
The Autumn seems like a prudent timetable to take a long term view across the board especially given the current state of the government coffers, but you have to accept if government debt and current expenditure wasnt so high (through lack of prudence) then they could do more to ease the pain now.
That is precisely why debt should be reduced during the good times and not increased. That is where the lack of prudence comes in.
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Nick,
I suppose somebody ought to comment on your 'P.S.' bit about a 'flurry' of speculation concerning rumours about moving Darling.
Looks like this particular story is just a bit of hot air kicked up by journalists doing opinion pieces. So much of our news these days appears to be based upon short term jounalistic opinion.
I guess that investigative journalism is expensive. Is there maybe a half way house, for instance, where media organisations adopt an Alistair Campbell style 'grid' and use the limited journalistic resources to follow a planned path of investigation, leaching bits of the story into the public domain over a period of weeks?
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Ref Eatonrifle
Do you think there is scope for cutting waste from current goverment spending.
Do you think it is prudent to increase debt during a period of economic boom and hide even further debt in PFIs
Do you think every vegetable should have a QUANGO or do you think potatos are special.
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57# Think we've been here before Russell. Is there waste of Course there is. Has there always been Yes, will there always be Yes.
As for the potato council, can't say I know a lot about it. Was it set up to help/promote British agriculture in some way, I can't be bothered to Google it.
Surely you must have noticed that every party not in power claim they posess the magic bullet of cutting "waste" then spend money on schemes of their own which others consider waste.
Don't think I'm being all that political in a party sense, I bet if you went to any European democracy the opposition and large sections of the population would say exactly the same as you. Once in power it aleways becomes somewhat more difficult as you then find out what the counter arguement is for keeping the respective Potato Councils.
One thing though Russell, what do feel about all the unemployment these cuts would inevitably create? No Problem?
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# 46 Jim Brant wrote:
"If we followed your advice where would we get the money to pay for pensions? Or the NHS? or Education? or the armed forces? Or the police?"
In my opinion, all 'pensions' should be private in that they are totally owned by the individual, who contributes whatever he or she can, and if said person can persuade an enterprise to contribute as well, then fine.
Similarly, I think the individual should be able to choose whether he or she contributes to some State run services such as education and health, or alternatively, retains the money to purchase those services 'in the market'.
The Armed Forces should be funded via an EU-wide federal tax.
The local police force should, where possible, be funded locally via local taxes and be directly accountable to local people.
The police are one of the most notorious vested interest groups and must be directly accountable to the people they serve.
My view is that generally speaking taxes should be hypothecated because it imposes some financial discipline and accountability on politicians.
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I emailed the PM at Downing Street about oil prices a couple of weeks ago, and by the way, I also emailed last week about Abu Qatada. I have had no response, I now see the email service is down for " maintenance issues". But I am glad to hear I can still use their "Twitter" service... says it all really!!!!!!
http://www.number-10.gov.uk/output/Page821.asp
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#55 RussellHolmstoel: "if government debt and current expenditure wasnt so high (through lack of prudence) then they could do more to ease the pain now."
I think this has been done to death on here. You think that debt is high because you include PFIs and (bizarrely IMO) Northern Rock. I don't think it's high, because I agree with the independent Office for National Statistics and don't include those items. However, it is true that we are close to the government's own self-imposed limit, which is considerably lower than levels of debt in other countries.
The fundamental difference between us is, I think, that you would want to reduce levels of debt during the 'good times', whereas I approve of the government's policy of using the money instead to improve our basic infrastructure (ie by investing). You get the same sort of dichotomy in business, and I suppose ultimately it's a question of balance - and my opinion is that the balance over the past few years has been about right.
The Tories wouldn't have the same problem, of course, because they would have given the 'free' money away to (relatively) well off individuals like me in tax cuts, so they could neither reduce debt nor invest (enough). That sounds suspiciously like the situation I remember pre-1997, though then we also had the obscene idea that it was a good thing (or at least 'worth it') to pay large numbers of people to do nothing.
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#59 JohnConstable: I'm just glad I don't live in your world. You make Thatcherism look like selfless compassion.
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Of course The Chancellor's job is safe. Can you imagine GB inserting someone in this office who could later emerge to stab him him the back in the same way that he himself did not that long ago to what is turning out to be his better half. This office realistically has to be occupied by a yes man and not a future leadership contender in his eyes. He is a paid up member of the self preservation society.
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jimbrant @61
Your phrase "The Tories wouldn't have the same problem, of course, because they would have given the 'free' money away to (relatively) well off individuals like me in tax cuts,.. "
displays an assumption that cutting tax is 'giving away money'...
It is the private sector that produces the bulk of nation's wealth. The government, the public sector and all those receiving benefits (of whatever kind and whether justified or not) - live off the wealth produced by others and confiscated as tax.
I wish people would remember that when they start carving up pies that other people made.
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50 eatonblunderbus
Oh, you nasty person. I'm really upset now. And just because you are having a go at me for advancing something I said before on fuel tax. Something that is very relevant to this discussion.
I must be the only person to have ever said something twice in a political argument.
Except of course Brown who says the same thing time and time again in PMQs, even when it isn't true.
As for pernicious insinuations, I refer you to the collected speeches of Gordon Brown and Tony Blair for prime examples. But of course, they had/have parliamentary privilege and can't be charged with telling porkies in the House, can they.
Sorry old bean, that one won't work.
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63 waldorf
Never a truer word said on this blog.
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58. Eatonrifle
Well yes but it?s the degree and the level of acceptance of it thats now so wrong.
The 29 million spent on thinking about the asylum centre. Any shame then? no the Home Office said ?the whole episode had produced an overall positive impact for the public", because "officials have learned important lessons?
You just know that anyone that can put out a press release like that does not give a toss about how they spend your tax. Its a plain indictment of the culture.
As for the potato council, its there to encourage you to buy potatoes.
Any government can create 700 000 jobs by Quango building, that?s not getting rid of unemployment, especially when you pay the CEO more than the PM.
But as I said before Im not sure unemployment is low, there has been so much fiddling with the figures of unemployed and disability benefit over the years (by both parties) its hard to tell.
But if youre asking me do I want to pay someone to market potatoes then no I don?t, I want the potato farmers to do it. Just the way I market my business. You just know government wont be doing it well and the farmers would.
I ramble but my point is simple I believe that the Tories are more likely to cut waste than Labour.
I want the Boris effect. I want someone searching the corridors of power looking for those bottles of chateauneuf that were secreted away by the last administration. And not more of the same.
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#64 ScepticMax:
I'd like to introduce you to JohnConstable. I think you might get on.
PS The engine on a train does all the work. The track just lies there doing nothing. But the engine without the track is just a useless lump of metal. NOT from Chairman Mao's liitle red book, SFAIK.
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Jimbrant
I don't think the arguement is about how much is taxed and spent. Of course in 1997 more money needed to be spent on schools and hospitals etc.
The problem is that people do not think we have recieved value for money. A lot of people also think we are going to still be paying for years to come for contracts that will never deliver value for money.
At the moment our cost of living is rising through the roof. The public a furious that the 'Iron Chancellor' has not put anything away for a rainy day.
I could even begin to forgive that level of incompetence, if when Gordon became (caretaker) PM, he had a bunch of policies up his sleeve that were going to take the country somewhere.
The recent Social Mobility announcement is typical of the hollow thinking in number 10 at the moment. £200 pounds to help certain families achieve Social Mobility! What a laugh! 54p a day ain't going to go far.
A lot of people think that that projects such as Social Mobility would be better achieved by diverting money from Quangos and giving the cash directly to schools and hospitals to spend as they see fit, rather than wasted on endless Whitehall puff.
I could copy and paste the list of 50 odd 'educational' Quangos, but as people keep saying we've been over some of this ground before.
Weird thing is - about a year ago, I thought Gordon was looking all powerful and had a plan. I thought we were looking at at least another 10 years of Labour government. The problem is the policy cupboard seems empty.
The recent bloodletting release of Labour memoirs has placed Gordons hand on the knife in Tonys back. The public don't like backstabbing. We don't like someone who claims a mandate to govern, without having grasped the nettle of an election.
It is especially annoying when the toppling of one PM has been for the sole purpose of anothers ambition and then that person has no useful direction that they are taking the country.
Gordon could have secured years more Labour government, but the weels have come off the project and we now have a vicious circle of bad news.
The bad news for Gordon is that his previously good reputation as Chancellor is now being rubbished as his actions at Number 11 come home to roost.
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64 scepticmax
A question we should all ask is why when GB is "giving" more and more money to public services are those services deteriorating. The answer is legislation.
The more legislation enacted the more staff are required. For targets, health and safety, etc.
The more staff, the more wages/salaries need to be paid. Add employer pension and NI contributions (about 12% pension I think) plus larger offices, uniforms, equipment, desks, etc and the cost rises very quickly.
With more staff the managers have a good case for an increased salary which means more NI and pension contributions.
Now the difference between private companies and public organisations, like councils, is that companies make profits and use the extra staff to increase those profits. They are productive.
Public organisations, on the other hand, have a fixed budget and have to absorb the extra costs caused by the legislation. But the staff have to be paid and the overheads paid. So there is less in the pot for services and cuts (sorry economies) have to be made. Result, old peoples' provision is lost, subsidies for organisations are reduced or stopped, and we complain.
When will politicians learn that all the extra legislation is killing public organisations.
And where has all the job creation come from - enlarging the public sector.
Economic madness!!
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# 62
Ah, Mrs. Thatcher, the good, the bad and the ugly.
It was all there so I won't rehash it.
My starting point, politically speaking, is huge respect for the individual.
A lot of the stuff I come out with begins there, especially freedom of choice, which I think English people are particularly keen on.
However, there has to be some 'community' to produce a coherent society.
That was a big shock when I first visited America in the 1980's and discovered that, certainly at the local level, it was not dog-eat-dog, but very communal.
In fact, they had more of a sense of community than us English.
When we regain our proper English political identity around 2010/11 then I hope we can bolster our sense of community.
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As far as I can see it the argument against financial prudence goes along the lines of if it's there spend it on those projects that need it and sod the need to be setting money aside for a rainy day. This kind of short term approach is spectacularly unwise as current events are now beginning to highlight. The kitty does not have to be handed out as sweetening tax cuts as suggested but can be set aside so as to be available for future emergencies. For householders that could be a new roof, a new boiler or any similar unexpected project. For the government it could be a blip in economic circumstances. Too often these issues are presented in black and white party political terms and neglect the need for plain common sense.
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re: 42 anthonyagain
""just let me keep more of my money in the first place" by reducing the basic rate of income tax to 20% has Mr Brown not done this"
err, no, not for the poorest people. for the poorest people he doubled their tax rate from 10% to 20% overnight and then asked them to beg for some of it back via tax credits which a lot of people can't claim.
for the lucky people who did win out from the 22 to 20pct drop that's more than outweighed by the tax increases elsewhere such as national insurance and council tax.
re: various other postings...
There are various postings on the BBC blogs generally that continually go on about the labour line of "you can't maintain or improve public services unless you throw extra money at them" argument. I refuse to debate that point anymore because anyone who's not already convinced by the perfectly reasonable arguments that have been discussed over and over on all the BBC blogs about that will never understand the economic/logical realities and/or theories which make that labour line so self-evidently wrong.
A lot of other postings are mentioning the kind of alternatives to "just throw money at it" that I mean, but they're getting lambasted by the Brownites who refuse to listen to reasonable argument.
True, no economic theory is perfect and/or can stand on its own, but please, Brownites, please, at least admit that there is more than the one theory of "throw more money at it" that works in this world and that should be used for the good of the country.
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Re 36@scepticmax
Market forces is supply and demand. While the demand for oil outstrips supply, the saudis can sell to whoever pays the most. The country CANT just go to another supplier. As it is the same for them It is a Sellers market. Or am I just being idiotic? I see several others disagree with you.
From your aggressive defensive tone on this subject, you appear to be a serious motoring addict in denial.
awa_the_noo@8 Mr Beans back I see.
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addendum to my previous posting:
yes, I do know that they "changed their mind" over doubling the rate, and that they did end up with a half-baked compromise that still adversely effects a lot of people and that ended up costing the tax payer generally around an extra 2.7billion.
Bear in mind that Brown (not Darling, he's just a puppet) only changed his mind and came up with the half-baked solution following a year of planning, followed by a year of notice, followed by a month or so of his job being threatened.
It was only when Brown's personal job was being threatened that he finally caved in.
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#71 JohnConstable: "That was a big shock when I first visited America in the 1980's and discovered that, certainly at the local level, it was not dog-eat-dog, but very communal."
Have you ever been to Duke University? and its environs? Or the Capitol, and walked the mile or so to Brown University? It's all very well talking about community spirit in small town (white) America, but look under the surface. And if you don't believe in dog-eat-dog don't post as if you do.
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#72 waldorf29: No. Putting money into infrastructure is not short-termism. It is prudence for the long-term. Certainly lack of investment in infrastructure is the opposite of prudence for the long-term.
Too often these issues are presented with no concern for the long term, because we have elections every 5 years or so. And a media that can't see beyond the end of this week.
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Getrid...@73 A lot of money has been spent on putting right years of underinvestment by previous governments.
Underspending often leads to problems that cost more to solve than if there was sufficient funding in the first place.
As was proved by the last Conservative Government. Investing is not throwing money at a problem.
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Nick,
Don't you get frustrated when, despite your best efforts, you see the ICM poll figures published in the Guardian of all newspapers, and you read their economic correspondent's take on Bottler's year.
Those two items don't seem to match the glowing picture of Bottler that you keep trying to portray.
If it weren't for the Guardian et al telling the silly public about ICM results and other obstructive and negative remarks, you might be able to get out the message that you really want about Bottler the Magnificent.
You seem to have joined the losing team when you chose to back Bottler. There's still time, though, for you to jump ship to the LibDems - they are only trailing Labour by a whisker, and could do with your support.
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Ref 77 jimbrant
If your salary doubled over the next 5 years would you:
1 Double your overdraft and use it to the max
2 Hide even more debt on your credit cards
3 Borrow additional funds from your pension fund
4 Increase your mortgage massively
5 Use some of the extra income to reduce your existing debt a little.
6 Save a little for a rainy day.
Would you ever use the term prudent for someone who did all of 1-4
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#4 "Really, we've got nothing to offer the Arabs".
Not true. Another batch of cut-price Eurofighters (possibly with a few bundles of unused banknotes attached) would do nicely.
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I think the following from the Guardian on the ICM poll says a lot.
"The figures record the dramatic decline in Labour fortunes since Brown took over as leader. A year ago, Labour had a four-point lead over the Tories in the June Guardian/ICM poll. Support for the party, at 39%, was 14 points higher than today.
Voters also think Brown has failed personally as prime minister. Asked to rate his performance on a scale of one to 10, voters give Brown only 3.94 on average. Almost a quarter, 23%, give him a one.
Even people who remain loyal to Labour are unconvinced by the prime minister's performance: only 4% give him full marks. Among people who voted Labour in 2005, many of whom now back other parties, 54% give him five out of 10 or less."
I think that says it all.
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77:
Put very simply you can't spend money that you don't have. It's basic economics. That's what happens to all those poor people who rack up debts because they are seduced by advertising and buy things they don't really need because it's on offer or they just want it. They either end up in the arms of money lenders with extortionate and ever increasing interest rates or take out new credit cards to service their shortfall and end up with a massive debt that they are unable to pay off. What on earth is left for that rainy day? Zilch! If you can't afford that shiny new car stick with the old one until you can. It's not rocket science. If the money had actually been spent exclusively on the infrastructure I might agree with you but it hasn't. A lot of it has been wasted on a bottomless pit of expenditure that has not been proved to be value for money. It's money growing on trees as far as I can make out and it's not been spent wisely in my view. Furthermore it's our money. The Government is just the middle man.
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83 waldorf
Totally agree.
In my family and my wife's its taken for granted that you don't buy what you can't afford. For my mother it is only ever pay cash.
We have a credit card that we pay off every month. It is also a loyalty card with vouchers for goods that are used for the odd bottle of wine.
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#82 mikepko
I think they are right about NuLabour membership. Not many weeks ago I went onto a NuLabour blog site and the following thread, about NuLabours money problems, went like the following;
As a continuation of that, I've always thought that if Labour suffers a catastrophic defeat at the next election, a new party with a new name might be the way to go.
Light at the end of the dark, dark tunnel. Create a new national organisation which the current leadership has not tainted. It's like Ramsay McDonald all over again with these incompetent goons isn't it?
If one were being totally brutal about this, wouldn't we be better just recreating the party and leaving the old debts behind with levy, blair, brown etc.?
Why bother finding £24 million when you can just leave it parked in the old vehicle and tell the lenders and the leadership to go "roger" themselves.
When you owe little enough that you can pay back it is your problem but when you owe more than you can afford it becomes the lenders problem. The only people who lose out are the leadership and the lenders and to be frank, "stuff 'em".
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My father bless his soul never in his life countenanced paying for something on the never never because he argued that this was tantamount to pouring money into someone else's pocket. I didn't follow his good advice however and for years was burdened with an ever increasing credit card debt (Access) which was eventually paid off. Granted these days it is very difficult or even impossible to buy a home or a new car without finance but as long as you can manage the monthly repayments that's okay. Many people run up a credit card debt but pay it off at the end of the month. This is the position with Manchester United right now. They have a massive debt but they are able to manage the interest payments as well as put a little money aside as a result of their earnings. When the owners eventually sell off the club it will probably go to a consortium that are wealthy enough to either eliminate or take on the debt.
It might be argued that GB is able to manage our debt but without access to the books I'm not certain. What I do know is that we have to spend taxpayers money wisely or our children will be unnecessarily taxation burdened long into the future. With inflation also on the rise that doesn't make for a very pretty picture in the long term.
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85:
This is exactly the tactic they use for failing schools in my area of Surrey. Change it's name and it's fortunes may pick up is the thinking behind it. After all if you give a dog a bad name it tends to stick even if it behaves itself or changes it's behaviour for the good.
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83 Waldorf
WC Fields had it right
"Income one dollar, expenditure 95 cents result happiness.
Income one dollar, expenditure one dollar and 5 cents, result misery."
Of course, in those days there weren't such things as credit cards.
I firmly believe that two of the most important things to teach kids (sorry young people or is it trainee adults - ugh) are compund interest and percentages. Once they undertand these they are equipped for financial security.
Sadly, according to statistics, only 50% of the population undersatnd percentages, and I imagine fewer understand compound interest.
It is a recipe for financial disaster.
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85 Roll on 2010
Could this be a case of the rats deserting the sinking Labour ship?
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#89 mikepko
Looks like it!
One other posting I found of interest was the following. It concerned union disaffiliation from NuLabour during the recent trade union conferences, it was as follows;
GMB and UNISON won't. CWU might after the way they were screwed over last year.
I'd love to say I was shocked by Brown's craven defence of the incompetent Royal Mail management and his "get back to work" attack on postal staff (Labour Party affiliates) but unfortunately nothing about New Labour surprises me any more.
The blogger was called - e10rifles. I am not sure whether thats a play on words or not?
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#46 jimbrant said in relation to hypothecated taxes:
Indeed it does. If we followed your advice where would we get the money to pay for pensions? Or the NHS? or Education? or the armed forces? Or the police? There is no, or very little, money to be raised from those sectors, so any government has to move money from areas that are revenue raising to pay for them
*************************
Sorry to drag this comment back up, I actually disagree with Jimbrant and agree with hypothecated taxes. However a little tounge in cheek, but we may have to restate the reason why we pay Income tax, I mean i dont think it would work wonders for the EU if we had to declare war on France due to hypothecated taxes. However i have just found your source of funding for the armed forces and education etc.
Also should the NHS be funded from National Insurance contributions?
Granted this is all hypothetical, but surely everything we pay for has related tax (the money from that tax may go elsewhere)
Ta
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# 91
I do believe that in the beginning National Insurance (NI) was actually meant to be a hypothecated tax.
I understand that it was supposed to be spent exclusively on the NHS and pensions.
However, politicians soon corrupted the whole idea.
Today the NI tax, 11% employees plus the 'topline' bit you never see printed on your payslip, namely the 12.2% employers 'contribution', simply get poured straight into the politicians pork-barrel.
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To alleviate the pressure at the pumps why not remove VAT from fuel. Alternatively raise or add VAT on other items to give the user the option of buying or not.
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#92
I guess also it would be far to complicated for any politician in the cabinet to run more than one money pot without losing it. I get the impression all parties dont really know what they are doing.
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Re Number 93.
I may be mistaken, but the ability to raise or lower VAT can not be done WITHOUT the full authority/ permission of the EU.
I believe TB signed over that power a few years back in exchange for them not to be too beastly to him in public.
If I am wrong, someone is sure to point out the truth, if any.
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Nick,
The torys always hint at policy direction but never have any substance, its easy to do that! Has it got that bad you've got to suggest policy for them? Nonsense speculation, for a nonsense tory party!
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#95
I think it is unlikely that the national Government would have to ask the EU for permission to change VAT rates.
However, I believe that the ordinary VAT rate of 17.5% in the so-called 'UK' is less than the EU average.
Which immediately rings an alarm bell in this posters mind ... Government a bit short of cash ... hmmm ... raise the VAT rate and then claim it is still only the EU average.
Never under-estimate the rat-like cunning of cash-strapped politicians.
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Gee-wiz Nick,
A poll published in the BBC-Bible (The Gruniad) and yet no mention within the political section...! Nothing to hide, surely...?
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Millionaire Stuart Wheeler says he will appeal against a High Court decision to oppose his bid for a UK referendum on Lisbon Treaty.
You've lost man, give up, you've lost.
THE HIGH COURT SPEAKS.
As for VAT, be reminded that VAT was 8% in 1980 and thanks to the Tories it shot up to 17.5%. We do not require permission to increase VAT, but one requires to obtain permission from the EU to reduce VAT.
Have a nice day Nick.
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But Gordon Brown is responsible for the price of petrol having risen so high, in sterling terms.
The pound has been very weak, down 15% in twelve months against the euro, matching only the US dollar in terms of currency weakness. If the world perceived we had a stronger economy then our currency would not be so weak.
If sterling had moved in line with the euro over the past year, the litre of unleaded that I purchased last night would have cost me 102p not 120p.
Unfortunately, as less money would be leaving my pocket, then less would be finding its way to the Treasury. So, perhaps Gordon Brown is less concerned than he says he is.
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Why should we have all sorts of complicated VAT schemes to satisfy the motorist? Why should we have a seperate VAT system for them and how much would that cost?
The motoring lobby is too powerful.
Also we are onto Europe again. I think some people should find a world atlas, a post empire world atlas and find the UK(John Constable can find England), then find the U.S. then find Europe and the far east. Notice how so very tiny and insignificant we are? Especially england JC.
Get your heads out of the 19th century and embrace Europe as a power for good in the world. We should be part of it in the centre of influence. instead of whinging from the sidelines. One of the few things this country is good at these days.
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# 101
If you read a few of my previous posts, which are available via the name link on the entry banner, then you would see that I am broadly in favour of Europe and fully appreciate the relative position of England in relation to the EU.
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I have recently worked in Saudi Arabia for 1 month. Petrol there is 8 PENCE per litre! Even allowing for transport to the UK this shows the REAL cost of oil based products, the Saudis still have to get it out of the ground and refine it.
Of course that's why they all drive around in large American and Japanese 4 x 4 vehicles, oblivious to the, frankly, pathetic cajoling of our government to get us to accept grossly inflated fuel and food prices. You can bet that the oil companies profits will not reduce over the coming months!
It seems that it's ok for Mr Brown to go flying off to Saudi for a day to arrange an insignificant increase in oil output, who's paying for HIS carbon footprint?
How nice to hear that they are to be asked to agree to a revised tax-free ADDITIONAL allowance roughly equal to the national average wage. It makes us all feel SO good!
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I was interested to read the piece on petrol prices and AA members aiming to vote in a Government which may keep petrol prices down. Always interested in actual numbers, I calculated, on hearing there were 23 million motorists in the UK, that they represented 37 per cent of the population. On that statistic I thought that the present Government and any future government need not pay too much attention to a motorist lobby on petrol prices. Unfortunately I am still in a situation where I cannot read entries to this blog and I am not sure how to remedy this situation.
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@92 - National Insurance was supposed to cover the cost of stae pensions, widows pensins, unemployment benefit, family allwance, social security, the NHS etc etc.
The problem is that It was paying out from day one and as a rsult was always a generation behind with today's workers paying for yesterdays pensioners and debts being run up to pay for todays unemploment etc.
To compound, people started to live longer (selfish I know) and stay in school longer thus working less but needing more money just to stand still. If that wasn't bas enough, medical costs rose - not just the cost of treatment, but wages and buildings built to modern standards and other modern peripheries - birthing pools and all that tosh.
The net result is National Insurance is actually to low for what it is supposed to cover so the welfare state has to be bailed out with general taxation.
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johnconstable@102
Sorry about @101 but I jumped to conclusions as you seem to have English Nationalist leanings. I thought you wouldn't want to be in an even bigger union of countries.
You appear(I might be wrong again) to be in favour of a referendum on the Lisbon treaty though. Maybe it should be a referendum of Lawyers. because nobody else can understand the thing.
My opinion is that should be left to parliament and legal advisers. They are also citizens of this country and also have its best interests at heart. Despite what you read on these blogs.
Europeans are also protesting about their fuel taxes. It is happening all over the world.
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Below is a post I left on another BBC blog - but it is much more relevant here.
I always laugh when I hear the phrases 'the powerfull motoring lobby' - which simply means they are very loud, not that there are many of them.
As you will see below - most of this is hype whipped up by a minority using the favourable media who obviously agree with their plight.
Lets get the facts:
If I own a Fiat Punto (80.7 mpg) and have done since 2004 (when petrol prices were a staggering low 84p a litre ) and I do the average daily UK commute 8.5 miles - that means today I am paying an extra:
80p a week
£3.53 a month
£45.23 a year
Now I'm all for keeping the budget low, but that's not really an amount that would 'kill me' as many people are claiming.
It's true, if I own a Land Rover discovery (22.3 MPG) it's not as good:
£2.90 a week
£12.77 a month
£163.70 a year
However, if I can afford a 30k-40k motor, then surely I can afford this price rise.
So the question is - who is really being affected by increased fuel prices?
a) Are you driving over 8.5miles commute a day? If so then you live too far from work - either move house / job, or stop moaning.
b) Are you driving a huge car? Well then I think you should sell it, buy a punto and don't buy a car in future based on 'trends' or 'fashion'. You were a fool to buy it, now stop blaming everyone else and get down the local car dealer and trade it in for something more practical before the value crashes through the floor.
c) Are you just moaning because everyone else is?
I think most people fall into the last category - like a bunch of mindless sheep.
The only people really affected are those who's business or industry relies on motor transport (hauliers, delivery etc.). However if these business haven't worked out yet that they need to drastically stop their reliance on petrol - then they are doomed anyway - because any sharp competitors will have, and will be doing something about it.
People in this category seriously need to invest in alternatives NOW (lpg for example) - the longer you leave it, the bigger the rush will be and the more expensive it will be.
It all comes down to good planning, any haulier / delivery company that starts up today that has no reliance on petrol or diesel will have a massive competitive advantage.
Stop reading the Sun, stop watching the news and start doing some maths and you might actually see what really does matter in our economy.
I have an average sized car and ride to work on my bike - I have been virtually unnaffected by the price increases and what increase there has been is very good value for money considering the social cost of driving.
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A Norman Tebbit blast from the past. 'Get on yer bike!' Did you see the documentary about the 32 blind spots for a lorry driver turning left at traffic lights. This has led to countless cyclist fatalities. No thanks. If you want to risk your life be my guest! The ultimate cost could be a lot higher than you bargained for.
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dhwilkinson@106
You are absolutely right about the treaty.
I decided a couple of weeks ago to read the treaty so I could get a better understanding of it.Went to the internet and found an ABRIDGED version that was 385 pages long so the full version must be the thickness of a telephone directory.The whole document,which I hassened to add I didn't read past page 20 because I gave up, was written in such a way that only a civil lawyer or the like could understand it.So I am not at all surprised that the Irish and the French and Dutch before them kicked it into the long grass.
If these people in Europe really want to stimulate proper debate at all levels they need to re-write this document in a way that us ordinary mortals can understand avoid all the European political speak.
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# 109
I did make precisely this point in an earlier blog post where I pointed out that the American Founding Fathers managed to produce a masterpiece that 'ordinary' people could understand.
The Eurocrats live in a different universe and urgently need to return to planet Europe or the whole project will drift.
They need to stop thinking that people can be coerced into an 'ever closer union', re-write the document in plain language and we might get somewhere.
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One wonders what Brown's opponents would sensibly do to alleviate the impacts of soaring oil prices? The trip to Saudi Arabia was pro-active and a measured response to what is a global issue.
To give the Tories some credit though a petrol fund generated by the "VAT windfall" on petrol is a good one. I must say though that I haven't actually seen anyone on the Conservative benches articulate this.
Liked Brown's comments on George Osborne's flip flopping at PMQ's today also. Is Gordon Brown getting better at this at last?
Nick spoke yesterday about plans to move Alistair Darling aside. I wonder how long it will be before Dave Cameron decides to shuffle George Osborne to a different role?
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waldorf@108
"...Did you see the documentary about the 32 blind spots for a lorry driver turning left at traffic lights. This has led to countless cyclist fatalities...."
The answer is obvious. Don't ride too close to a lorry and Use cycle lanes or cycle paths whenever possible. Its not like your 100% safe in a car. If your journey is about 2 miles each way the best option is to cycle. Use up some of that plentiful supply of untapped energy. Shorter distances you can walk. Don't let the media frighten you into thinking the streets are unsafe. Cars are unsafe as well.
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#108 - Oh dear, I'm afraid waldorf29 you are the man with eyes that cannot see.
I ride my bike 9 miles through central London in both rush hours, and not once have I been even close to getting squashed by a truck. Excuses like that are pathetic really, and the sort of thing I'm sure your descendants will be spouting when scrabbling around for the scraps of resources left on this planet.
I'll take my chances with the dangers I can see - rather than the hidden dangers you can't - e.g. Carbon Monoxide coming out of your exhaust.
I will be retired before I'm 40 - and a lot will be due to my near 0 travel costs over my working life. I wonder if you will be able to say the same when you're still working at 85 just to keep your engine running.
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Women cyclists are far more likely to be killed by a lorry because, unlike men, they tend to obey red lights and wait at junctions in the driver?s blind spot, according to a study.
The report by Transport for London?s road safety unit was completed last July but has been kept secret. It suggests that some cyclists who break the law by jumping red lights may be safer and that cycle feeder lanes may make the problem worse.
The Times has obtained a copy of the study, which says that 86 per cent of the women cyclists killed in London between 1999 and 2004 collided with a lorry. By contrast, lorries were involved in 47 per cent of deaths of male cyclists.
The findings help to explain why the growing popularity of cycling by city commuters is resulting in frequent deaths of young women in similar circumstances. The death rate among women cyclists has increased since the report was completed, with two killed in collisions with lorries within 24 hours last month.
Amelia Zollner, 24, a Cambridge-educated scientist working at the Institute for Public Policy Research, was cycling to work in central London and had stopped at traffic lights in Russell Square next to a lorry. She was killed when the lorry pulled away after the lights changed.
Rosie Wright, 26, worked close by at the School of Oriental and African Studies, and spoke with friends about her distress on learning that a young woman had died. The next day she was killed by a lorry accelerating away from traffic lights.
The study states: ?Women may be overrepresented in [collisions with goods vehicles] because they are less likely than men to disobey red lights.?
By jumping red lights, men are less likely to be caught in a lorry driver?s blind spot. Cyclists may wait at the lights just in front of a lorry, not realising that they are difficult to see.
In more than half the fatal crashes, the lorry was turning left. Cyclists may be deceived by a lorry swinging out to the right to give itself room to make a left turn.
The study states that cycle ?feeder? lanes, which allow cyclists to overtake vehicles along the nearside kerb to get to the front of queues, may ?exacerbate the problem?.
It also says that pedestrian guard railings may have contributed to three of the deaths because cyclists became trapped between the railings and the lorry, leaving them no escape route.
Peter Wright, the father of Rosie and a vehicle safety expert who heads the commission which regulates safety in international motorsport, criticised TfL for failing to publish the study. ?Rosie was reasonably cautious, which seems to be the problem. It seems that you need to be aggressive and assertive to survive as a cyclist,? he said. ?TfL?s attitude is unacceptable.
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waldorf29 - You really need to get things into perspective. I am already aware of some of those cases, and whilst tragic - they are in fact quite rare.
Pull up some stats for pedestrians killed in London in rush hour. I think you will find there is as much, if not a greater danger being a pedestrian. If you guide your life by statistics then you wouldn't ever leave home.
I have witnessed a dramatic increase in the safety of riding a bike in London. The reason for this is nothing to do with TFL, any council plan for cycle lanes or any government run scheme. The real reason is because of the huge number of cyclists. Motorists get used to how to drive around cyclists (like using the left hand mirror) and if you go to Trafalgar Square at 8:30 in the morning - the cyclist rules. Cars are forced to wait and drive at cyclist speed due to the number of bikes.
This is the way forward, get out there and earn that piece of road. Motorists have felt that they own the road for a long time now - it's time for non-motorised forms of transport to take it back.
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Ref 61 from jimbrant
Jim
Sorry I missed 61. I see you have upped the anti so I shall try to do the same. (Excuse 77 it was over simplistic.)
I simply include PFIs as they are a relatively new form of debt and this has increased hugely under Labour. I know the Tories started it, but Labour really took them to new limits. A whole range of commentators say they will prove to be much more expensive in the long run and it?s an off balance sheet trick to stay within golden rules. I don?t include NR. Don?t think I have ever commented on it. Unique situation.
I accept dept is low compared with others. But others have not had our sustained levels of growth. (IMF) The IFS reports that 1 in 3 OCED members now runs a surplus.
GBs golden rules sounded great when announced I thought they were very prudent at the time. You can imagine I quite liked the sound of budgets at least balancing or being in surplus over the course of the cycle, The idea that net borrowing was for investment purposes only tipped it and I voted Labour. Very prudent. So no debt without an asset element that would in time further increase revenue. Wow.
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There is an argument to say that this is very inflexible. i.e. if tax revenues will soar in the future. Similarly, the government should run significant surpluses if economic performance seems set to deteriorate. (You see where Im going here)
GB said later that the rule should not be judged absolute terms, but rather by calculating the budget surplus/deficit as a percentage of GDP. Since GDP rises over time, this has the effect of inflating the size of earlier surpluses compared with later deficits. But fair enough I can live with that I thought.
There was the debate over what is included as current spending. i.e. interest paid on Network Rail loans is not included, spending previously counted as road maintenance is now investment in new roads. Stretching it a bit thin this I thought.
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This comment was removed because the moderators found it broke the House Rules.
There was the debate over what is included as current spending. i.e. interest paid on Network Rail loans is not included, spending previously counted as road maintenance is now investment in new roads. Stretching it a bit thin this I thought.
But then it started to fall apart. In 2001 GB reported a surplus for the period of some £118B. 2002, £95b. 2003 43bn. 2004 10bn, and by 2005, nil. Analysts warned that taxes would have to rise by at least £10B during the cycle to get back to a stainable footing for the next. (prudence vanished)
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I am not sure that I have ever shouted for massive tax cuts, though I accept that this is Tory tendency. (I would rather see a surplus for a rainy day to protect us from gloom that is now on the horizon).
We are faced with either a massive rise in taxation or reduction in spending. (IMF agrees)
Hence I am not shouting for tax cuts or a reduction in front line services. I am however hoping that some saving is to be found in admin and waste.
Prey that I am at least right in part because if not then we are in for a really rough few years.
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You may recall in 2005 he moved the goal posts by extending the period of the cycle by 2. it was adjusted to start in April 1997 not 1999. Magically creating a 16.3bn surplus.
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In short GB is now faced with lower revenues from a slow down in the economy v continued ambitious commitments to increase spending on public services.
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Having some technical problems are we boys ?
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114@waldorf29
If there was a articulated lorry or a bus beside me I'd probably get off and go on the pavement(pushing). and cross the road as a pedestrian.
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Ref. 115
Yes, get things into perspective - actually motorists DO own the road, they pay for it. As far as I am aware cyclists pay nothing, but they are still bound by traffic laws.
Of course in some countries cyclists and motorists get on together fine (Holland for example) because they have a long history of mutual co-operation.
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120# Russell
So the IMF said "massive" rise in taxation?
OR is that you adding yoor choice of adverb for effect Daily Mail Style??
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Ref 126. Eatonrifle wrote
Yes it a subjective phrase, never read the Mail, and no the IMF said 10bn.
Its just little old me calling 10bn massive. it is after all about 350 per working person in the UK (and that was mid 07s assessment, and is almost certainly lot more now) I will happily consider any preferred adjective to accompany 10bn in future posts let me know yours.
Interested to hear your thoughts on the content of the whole post and a counter balanced argument to the contrary though.
116-122 was all one post, it just seems to have got chopped up and rearranged a little.
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Re@125 viking1209
Motorists owning the road because they pay road tax.
Lets not get snooty Mr motorist sir. You pay because you have access to more roads such as motorways, the extra cost to maintain the roads and for the police, health service and fire brigades.
Bicycles have no wear on the roads and are negligable pollution(Exhailed Co2 if you want to be pedantic). They are more likely to be injured themselves than injure anyone else(On the Road riding responsibly). Next you will be demanded Coin operated pelican crossings for the privilege of crossing your roads. ;o)
My advice to these motoring fanatics would be to Walk a bit more and see the real world. You might be a bit less angry and arrogant. and save a little money in these difficult times.
The country as whole owns the roads.
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Haven't got time to read all the comments on here, but there does seem to be something that all the politicians and most of the general public are overlooking. A simple solution.
Raise the basic rate of Income Tax to accommodate a significant reduction in fuel duties?
I cannot believe that none of the major parties have explored this avenue. Contrary to the stigma attached to increasing IT I believe it would be a sure fire vote winner.
1) IT is the fairest tax.
2) It is the easiest to collect and regulate.
3) Taxes such as fuel duty, VAT, car tax, and well, any old stealth tax, could be reduced and the people would not continue to be hoodwinked
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Waldorf 29 , sorry to change the subject I've been trying to remember who you really are and I think i've got it, Your Dutchy2 the schoolteacher are'nt you, you've come back of holiday and changed your name, now why would you do that?
I'm surprised that you being a Dutch citizen have not been extolling the virtues of cycling in the Netherlands where cycling is a way of life, and a less manic one as well.
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130:
Had to change my identity because I believe kiwilegs had me banned. Was unable to log on or reply to posts via my original log in. So much for free speech eh. Cycling in Holland is relatively safe because of the proper provision of separate lanes for bikes. Wouldn't countenance it here particularly in the big city. Certainly don't think it's a valid argument to force people onto cycles and preserve high taxes on fuel merely because of the knock on inflation pressure it has on goods but then that's just my opinion.
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Re 131:
Were you not blocked waldorf29 formerly known as Dutchy5 for misusing the complaints system? You can't just demand someone is blocked without good reason. I wonder what happened to mutleyspup? I vaguely remember that blogger talking about about Holland. before a load of messages started being blocked. and they disappeared.
Nobody is forcing you to cycle. Its you that started scaremongering about articulated lorries. Stop being so defensive. Its not like your a driving addict or anything. You can give it up at any time ;o)
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131 waldorf, I thought I recognised that cheeky little style, welcome back, I hope you had a good brthday/ holiday.
Believe me the last person on these blogs that would have you banned would be Kiwilegs, you may be a pain in the backside sometimes but there are plenty on here a lot worse than you.
Yes the Hollanders do like their bikes and I used too when I was out there, much healthier and usually quite good fun but there are no hills there, so it makes it quite easy, but as you say I dont think it would work here now.
It used to when Iwas a young lad but I think the fuel situation would have to get a lot worse before it even begins to equall the bike loving Netherlands.
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Ref 128 dhwilkinson
I'm not at all snooty, just factual, apparently unlike yourself.
As far as I was aware my Council Tax pays for Police and Fire Brigade, National Insurance for the Health Service.
Bicycles may not cause wear on the roads but cycle lanes, cycle lights at crossings, signs etc have to be paid for. I don't know the pollution figures for the manufacture of bicycles but I presume that there is one, if you want to be pedantic.
I think that the "holyer than thou" attitude taken by the cycling brigade shows their own arrogance to these matters. Yes, I do walk often, and I have seen plenty of the real world, often working in areas with abhorrent poverty, way above anything which can happen here.
It is plainly obvious to anyone with a modicum of common sense that instant removal of the oil powered, internal combustion engine is just not possible.
My real point was that the motorist is asked to pay large, ever escalating sums of money, the majority of which is not spent on either motoring, public transport, future developments etc. It's hardly the individuals fault that no other practical form of alternative transport has been developed yet.
Perhaps you should be addressing your concerns to the oil companies who, after all, seem to be the ones who benefit from all of this.
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In my fomer identity I must admit I was a little sensitive to wind ups and replied in some cases much too huffily. I am now beginning to take them with a pinch of salt and realise that they were sometimes posted with tongue in cheek. I am actually rather beginning to enjoy the banter. Where people are not personally abusive to each other and respect each other's differing opinions I can exist quite calmly amongst you. Whether or not I will be able to completely hold off when kiwilegs returns is perhaps another matter but I'll do my best. After all as GA said earlier in these blogs in the grand scheme things nooone on here is ever going to change things. As far as messages being blocked is concerned that also happened to some of my own posts and I took it with good grace. The BBC moderators will not remove material unless there is good reason and I have promised to behave myself in future.
I did in fact enjoy my 60th birthday in New York although someone on here rather facetiously congratulated me on having the money to do so when others are struggling to make ends meet but that's by the by now. I have recovered from triple by pass surgery, a minor heart attack, the fitting of 2 stents and a rare eye melanoma last year. I still don't know whether it will eventually spread but for the moment I am enjoying life and I'll undertake to keep my blood pressure at a low level in future.
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viking1209@134
The emergency services might receive funding from local councils as well as some funding from government, but not all council funding comes from council tax. They also receive a grant. Not all NHS funding is from National insurance either.
Most of the roads cyclists can use are the responsibility of local authorities. Motorways (which cyclists can't use) and A roads are the responsibility of the highways agency funded by the government.
I assume you would like cyclists especially children to be safe so you shouldn't mind too much about spending some of your road taxes on cycle paths and crossings etc.
Is this statement by you @128 not 'holier than thou.'
__________________________________
"Yes, get things into perspective - actually motorists DO own the road, they pay for it. As far as I am aware cyclists pay nothing, but they are still bound by traffic laws...."
_________________________________
I find your comment about pollution due to manufacture of bicycles amusing. I wasn't aware cars were conjured up out of thin air by sorcerers and disposed of the same way.
Don't put words into my mouth. I do not want to uninvent The petrol engine. neither does theresonlyonesupey@107 he has a fiat punto and pays road tax.
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viking@134
You may have misunderstood my 2nd paragraph in dhwilkinson@128 about Motorists owning the roads because they pay road tax.
It should have read.
".....you have access to more roads such as motorways, and there is the extra cost to maintain the roads and the extra costs for the police, health service and fire brigades associated with motoring....."
In dhwilkinson@134 i should have wrote
"..Is this statement by you @125 not 'holier than thou.."
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What's the point of Brown going to Jeddah, pleading miserably for help with the oil prices?
The oil producers are sitting on a dwindling supply, and it suits them very well to get the highest possible price that the markets will stand.
If Brown really wants to help cut the price of petrol at the pumps, he could reduce the outrageously high rate of fuel tax.
The Saudis must be wondering what planet Brown is on.
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135 warldorf, As I say nice to have you back.
I have to confess it was me that made the remarks to you regarding you being able to afford going on holiday, but you were being equally nasty to me so I think were quits but had I have known that you had endured so much during that Period I would not have been quite so out spoken.you obviously deserved a holiday, and I wish you good luck.
I know that kiwilegs can be quite up front but we also have another one Trudie Victoria who is equally in your face and also a suporter of the working class I think she may be kiwilegs sister.
Any way warldorf I am glad that you've found your sense of humour, its not impossible to get your point across with just a little humour, of course there are some on these blogs that only know offensive and are never happy unless their trying to bring people down.
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Although oil appears to be a good hedge against inflation, the low dollar and a low oil supply, the truth is, our oil supply is becoming less of an issue with a surplus possible soon. Inflation is the reason for this. Right now, the main thing driving inflation is high oil prices. As inflation goes higher investors buy more oil driving inflation higher again. Some experts predict this will trigger the world recession. This will result in lower gas consumption and it will free up more gas supplies, perhaps even creating a surplus in my estimation. The US dollar is in a good position to rebound to the top of the heap. Why? Because the EU will drop in value. There's just too much turmoil in the European Union right now. Investors will see the US dollar as the only alternative. I am no expert but even I can see the writing on the wall. Investors are going to loose their shirts on oil just like the recent housing credit crunch. We may be looking at another ENRON only this time on a much bigger scale. Hedge funds that have invested mostly in oil will topple leaving old age pensioners with nothing. The government won't be able to bail them out this time because the cost would be far to great. The CFTC and FSA will probably be too slow to react to the cracks forming in commodities trading so the govenment will finaly step in. By this time of course it will probably be too late and the damage will already be done. I hope they read this first and do something about the LOOMING GAS CRISIS. Take part in our gas price poll at http://www.nbtv.ca
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#4 Redlnin. We do have something to offer the Saudi's. If they increase production and bring demand as well as the price down it will save the US and the UK having to take control of the whole middle east.
Something that has always struck me as strange is the fact that you have the middle east with all that oil and no real industrial aspirations. then you get the west who are totally industrialised and are gagging for oil and have very little. It makes you think if there were a God she/he has got a sense of humour. Anyway it gets stranger because when all is said and done and the oil does run out guess who's sitting pretty. Yep you've guessed it the middle east because the have an abundance of Solar power. I'ts just so unfair. Anyway we want to stick it to them now. Any western democracy selling alternative energy products in the middle east should be screwing them on price the same as they are doing to us.
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