Gassing about prices

August 01, 2008 10:10 AM

Screaming_man_2It’s the biggest issue facing households this week.  That gas prices have gone up again is cause for concern, with forecasts that some gas bills will reach over £1,000 a year.  At £20 a week, it’s clearly a particularly troubling for those in fixed incomes, notably pensioners.  Yet this raises a few issues.  Today the Government (read – pressure from the left wing of the Labour Party) are mooting the idea of a windfall tax on gas companies.


This ignores the structural factors in the gas market as well as the threat of companies passing on the cost of the tax to the consumer.  If the former rings any bells, just look at how the government’s fuel tax has backfired, with the tax comprising more than half of the price of fuel at the pumps. 


That we cannot store gas here, we get it transported through Europe.  Furthermore, as it has to travel the furthest from the East, we end up getting the surplus gas from other countries, paying a price for it.  The more prescient point is in the purchase of gas.  Companies buy it wholesale, and the price isn’t at current rates, but is speculative.  Now factor in the hysterics from the Green lobby, that everything will run out and how driving a car and using natural resources has turned into an Enviro-Crime, and you can see why speculators have put prices up.


Nevertheless, the government can do something about the current problems.  They could cut fuel tax for starters.  Rural communities in particular don’t use gas to heat their homes, resorting to oil heaters.  Then they could also cut non-essential spending, as we put in our Council Tax uncovered series of papers, the savings of which could be passed on in tax breaks to the British people.  Quite easily, these savings could offset any temporary peaks in fuel and gas prices.


Finally, a wider policy rethink is needed.  The Daily Mail wrote this week how the government’s green policies are putting an extra £50 on fuel bills through their fight against climate change.  But as usual, the British people have to tighten their belts and look on aghast as the government spend as if in a Boom, playing conscience politics with taxpayers' money. 


A debate is raging in America about offshore drilling, which has led to a recent drop in oil prices.  Speculation always responds favourably to good news.  So perhaps if the Green lobby weren’t so ‘the end is nigh’ we could put forward ideas and policies for lower taxes and lower fuel prices: unless they’d prefer it if we all lived cold and in the dark.  Thomas Hobbes, after all, called life in a state of nature “solitary, poor, nasty, brutish and short”.  Fuel for thought, perhaps.

Screaming_man_2It’s the biggest issue facing households this week.  That gas prices have gone up again is cause for concern, with forecasts that some gas bills will reach over £1,000 a year.  At £20 a week, it’s clearly a particularly troubling for those in fixed incomes, notably pensioners.  Yet this raises a few issues.  Today the Government (read – pressure from the left wing of the Labour Party) are mooting the idea of a windfall tax on gas companies.


This ignores the structural factors in the gas market as well as the threat of companies passing on the cost of the tax to the consumer.  If the former rings any bells, just look at how the government’s fuel tax has backfired, with the tax comprising more than half of the price of fuel at the pumps. 


That we cannot store gas here, we get it transported through Europe.  Furthermore, as it has to travel the furthest from the East, we end up getting the surplus gas from other countries, paying a price for it.  The more prescient point is in the purchase of gas.  Companies buy it wholesale, and the price isn’t at current rates, but is speculative.  Now factor in the hysterics from the Green lobby, that everything will run out and how driving a car and using natural resources has turned into an Enviro-Crime, and you can see why speculators have put prices up.


Nevertheless, the government can do something about the current problems.  They could cut fuel tax for starters.  Rural communities in particular don’t use gas to heat their homes, resorting to oil heaters.  Then they could also cut non-essential spending, as we put in our Council Tax uncovered series of papers, the savings of which could be passed on in tax breaks to the British people.  Quite easily, these savings could offset any temporary peaks in fuel and gas prices.


Finally, a wider policy rethink is needed.  The Daily Mail wrote this week how the government’s green policies are putting an extra £50 on fuel bills through their fight against climate change.  But as usual, the British people have to tighten their belts and look on aghast as the government spend as if in a Boom, playing conscience politics with taxpayers' money. 


A debate is raging in America about offshore drilling, which has led to a recent drop in oil prices.  Speculation always responds favourably to good news.  So perhaps if the Green lobby weren’t so ‘the end is nigh’ we could put forward ideas and policies for lower taxes and lower fuel prices: unless they’d prefer it if we all lived cold and in the dark.  Thomas Hobbes, after all, called life in a state of nature “solitary, poor, nasty, brutish and short”.  Fuel for thought, perhaps.

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