Petrol Prices Fuel Our Radical Alternative
By Mark Pritchard.
With prices at petrol pumps having tripled in twenty years, far above the rate of inflation, and now at record levels, and the Government set to slap another 3p tax on a litre of fuel in January, MPs responded by indulging in a futile debate on fuel prices on Tuesday afternoon.
A debate that may give the public the impression intended, that the politicians care about the increasing suffering this is inflicting on ordinary families and will do something. But which will result in nothing being done. Because the issues around fuel prices are much more fundamental, and will require much more radical action, than fiddling with a penny here and there on fuel duty.
Fuel duty is certainly significant: 58p of the price you pay for every litre goes in duty. Plus another 22.4p a litre on average for petrol and 23.1p for diesel in VAT. Craftily the taxman charges VAT on the rest of the price of the fuel, including duty, so you are paying 20% tax on tax!
The actual cost of the fuel, including refining it so it can go in your car, amounts to only 46.7p a litre on petrol and 52.6p a litre on diesel. This incidentally is pretty constant across the country – the wide variation in prices charged at the pumps is simply opportunistic profiteering by the multinational corporations on whom you and I depend to put fuel in our cars.
Those multinationals do not do at all badly out of it. Profit margins on fuel average 25% after tax, which is a very handsome profit margin as any businessman will tell you. Given that the UK rate on fuel companies’ profits is 62%, it is clear that their profiteering from our forced purchases of petrol and diesel is considerably greater than the 25% they get to pocket.
This is as far as the debate, very largely, has gone.
The AA and RAC on behalf of the hapless motorists bewail high tax rates and the Government, this one and the last, justify these on the basis of needing the money thus raised to reduce the massive level of public debt they have run up. The latter means neither Tories, Labour or LibDems will do anything much about the ever rising prices we pay at the pumps. They cannot afford to.
Public debt and what should be done about it is a separate debate. But in fact it is irrelevant to the real issue. As is arguing about the rate of tax on fuel.
The real problem causing the real pain to us ordinary Britons isn’t that an awful lot of the price we pay for petrol and diesel goes in tax and oil company profits. It always did. The real problem is that that price itself just keeps on rising ever higher, faster than inflation and, most importantly, faster than incomes rise.
Filling up our cars, and distribution companies filling up their trucks and vans, is getting steadily more expensive in real terms. It is this that is the real issue causing the real pain. Both directly at the pumps and indirectly as higher fuel costs feed through via higher distribution costs to put up the price of food and other goods in the shops. It is this that is the real issue.
The root cause of this, the real issue, is that the price of crude oil, the underlying raw material, is rising inexorably. Whilst pump prices go up pretty much in lockstep with the underlying oil price.
We are paying three times what we paid for fuel twenty years ago because the price of crude oil has itself tripled over this period. There have been fluctuations – the Bankers’ Crash of 2008/09 reduced demand for oil globally, the price of crude fell and so, briefly, did the price we paid at the pumps.
Also and as usual the nefarious and parasitic antics of global market speculators have temporarily distorted prices from time to time. But the underlying trend is inexorably up. In the long run, if things go on like this, we are going to be paying ever more – a growing fraction of our incomes, on fuelling our cars, vans and trucks. Whilst ever more of these costs will also put up the price of food, clothing and other necessities.
It is this, the inexorable long term rise in real oil prices, that is the fundamental problem, and the one the MPs’ bickering, shouting, making inane jokes and scoring party points as ever in Parliament assembled most certainly never really considered, let alone addressed.
So we must, especially as we are not burdened by the immediate pressures of Government or Opposition.
Why are oil prices steadily going up? The answer is basic economics: supply and demand. The supply of crude oil is not keeping pace with rising demand worldwide. This must and does drive up prices on the global oil market. Because we are in that global market, that means we get to pay more. And more, and more.
Why is demand rising? Mostly because India and China are massively increasing oil consumption. Partly to run industries dumping their cheap goods in our home markets thanks to the global market economy.
Partly as the profits of that exploitation and undercutting of Western peoples fuels greater consumption and especially car use amongst the exploiting classes in countries like India and China.
Whilst children and poor peasants work long hours for derisory pay in the sweatshops churning out their cheap goods, a growing class of bosses, managers and Capitalists is getting richer and swapping their bicycles for cars. Which need petrol. With economies growing at several percent a year these countries will keep on wanting more and more oil.
In theory, this rise in demand pushes prices up in the short term which in the long term creates more supply, as new suppliers are attracted into the market by the higher prices. In practice, oil is a limited good.
Higher prices do make previously uneconomic sources worth exploiting, but the cost of finding and extracting it steadily rises, so that these new sources do little or nothing to bring down the cost of oil. For example, a barrel of oil costs at most £2 to get out of the Saudi sands. It costs over £40 a barrel to extract from the tar sands of Alberta, Canada.
Matters are made worse by the fact that most of the world’s oil that is cheap to extract is in politically unstable and dangerous places, whose rulers seek to exploit the undeserved power the oil gives them.
The producers’ cartel OPEC has in the past consistently used monopoly power to keep prices artificially high – although now it no longer, interestingly, needs to do so. It has always been outrageous and immoral that British families needing to fuel their cars have been exploited by super-rich Islamic sheikhs who neither made, found, extracted nor used the oil beneath usually uninhabitaed and waste tracts of their domains.
As oil prices rise there is a strong case likely to be made in the short-term for an alliance of Western powers confiscating this undeserved asset and the wealth exacted from it. The more so as the oil states are swept by Islamism and political instability – the Saudi sheikhs are looking shaky indeed these days!
The replacement of bandits driven by greed with fanatics driven by hate in control of the oil supplies on which the West has become dependent would be a disaster demanding and probably getting urgent, and doubtless military, action. At least British soldiers would not die in vain in Arabia defending our country’s short-term energy supply as they do in Afghanistan defending nothing of the least relevance to Britain.
However, secret as the sheikhs keep the size of their stash of remaining Black Gold, it is no secret that it is limited and will sooner or later run out. Sooner, as global demand fuelled by China, India and their ilk, rises inexorably. The same is true of all oil reserves, at some point. Some probably not too distant point, in fact.
Although there is a great deal of crackpot nonsense spoken and written about “Peak Oil” (especially by those who choose to surround themselves with unthreatening cranks!) it is a truism universally acknowledged that the supply of oil is finite – the Earth is essentially a stone in the sky with a molten metal middle rather than a giant floating oil droplet, after all!
Also whilst in theory ever-more difficult and inaccessible oil deposits can be exploited as prices rise, eventually a limit is set by physics, rather than economics.
If it takes more energy to extract the oil than is released when it is burned, it is not worth extracting. And the energy cost of extraction is a physical cost, comprised of effort, not an economic cost denominated in money. Once we have to put in more energy per barrel of oil than we get out of it as fuel, further extraction is unsustainable. The oil has run out.
Long before then, demand rising faster than supply will have forced prices to unaffordable levels at the pumps. In theory, this would cause users to seek more affordable alternatives.
This is the theory behind the “fuel duty escalator” which was meant to control oil consumption by gradually reducing demand in favour of alternatives.
The problem is there aren’t any alternatives today, in practice. Public transport has been privatised and, over much of rural Britain, closed down. The railways, neglected for decades in favour if what Margaret Thatcher once famously called “our great car economy” are now inadequate to cope with demand, overcrowded, and, again, subject to the parasitic removal of corporate profit from their operations, further starving them of resources.
The transport infrastructure is now totally built around motor vehicles. The subservience of both Labour and Tory politics, nationally and locally, to economics in the form of huge corporations’ money has led to the replacement of local small High Street shops in walking distance of most homes with giant out-of-town malls of Tesco superstores etc., only really accessible by car.
The breakdown of community and the feeling of safety on the streets it brings, combined with the rising flood of cars making streets physically dangerous for children, has fuelled the motor-driven daily “school run” in place of children walking or being bussed to school.
The result is that most people have no realistic alternative to the car for personal and family transport. Nor do most businesses have one to using vans and trucks for distribution. The result in turn is that in the British – and other Western – markets demand for petrol/diesel is in economic terms “price inelastic”.
Raising price does not reduce demand, because people have no alternative but simply to pay more. As price rises people are forced to go without less vital goods in order to afford to get to work, school and the shops. Small transport businesses go bust.
But there is no significant move out of cars. Until a break point is suddenly reached – we can only speculate what that is: £5 a litre, £10, £50?—when suddenly most of the public cannot afford to fill their tanks, therefore do not go to work, and the economy and society collapse catastrophically.
That is what will happen eventually unless our rulers stop tinkering with a penny on or off fuel duty here and a VAT rate change there and start addressing the real underlying issue.
We are not the only people to see this: on the day Parliament had its futile safety valve hot air release, Richard Hebditch, of the Campaign for Better Transport, rightly said the “big problem” is that Britons are reliant on their cars and dependent on foreign oil supplies, which are “quite risky oil supplies.”
He went: “What we need to do is take the money from fuel duty and invest it in giving people real alternatives and modernising our transport systems so we aren’t so dependent on foreign and risky oil supplies.”
Mr Hebditch is right. We must go further – in the long run we have to aim for sustainable energy independence. An economy in which we meet all our energy needs from within our own borders and the territory we control.
It would have been easier if the oil we did have in the North Sea had not been sold off by Labour and Tory alike to foreign multinationals, who have flogged it all off for a fast buck. Instead we should have kept it in the hands of our own people, and husbanded it for maximum use, as Norway has done. Now we are importing oil, and gas, again.
As long as we can still afford to do so as we have to pay ever more bidding against the billions of India and China on the global markets.
We don’t need to forever. Oil itself is basically only a means of storing energy and moving it about until it can be used, normally to drive an internal combustion engine.
In terms of energy per unit mass it is very efficient. The main current alternative, electrical batteries, store much less energy per unit mass, which is why electric cars struggle to become established in the market.
When oil gets a lot more expensive or if batteries become a lot more efficient this will change. Especially as batteries can store energy captured from many sources – sun, wind, and water as well as by releasing energy from sunlight captured and stored by plants millions of years ago as with coal and oil.
We should, for example, now be funding massive research on new and better ways of storing energy, better batteries and making oil from coal (which we do still have in abundance). There are lots of other ideas we should be developing now against the day we will need to achieve energy independence.
This is what we as a country should be doing. As a Party, we should be explaining the real cause of dear petrol at the pumps is the fact that we are dependent for supply on a global market in which prices will keep on rising faster than people’s incomes.
We should be arguing the case for a radical alternative based not on 2p off fuel duty but on energy independence. Indeed we should be arguing the case for as much as possible sustainable economic independence in which we not only produce our own fuel and generate our own power but feed and clothe our own people from our own territory. Autarky rather than the global market.
At this point some more conservative with a small “c” – but no less patriotic and nationally-minded-Nationalists will argue that such radicalism will scare the horses and lose us votes.
They would and do argue we should not openly advocate a radical alternative to the global market Capitalist system – even though they must privately admit that if we came to power tomorrow it would expel us in a wave of sanctions etc. whether we wanted to leave or not.
Precipitating a massive economic crisis and very probably the collapse of our Government, the more so if we had not suggested any such break with globalism beforehand. They argue that economic autarky is politically damaging and should be dropped as a policy. We will never win power on such a platform, they fear.
In the short term they are right. But in the short term we are not going to be anywhere near power anyway. We will not win power on any platform for now.
In the short term the present System mostly sort of works and most of the public are mostly sort of happy with it. And therefore mostly sort of happy with the Parties that run it.
There may be ever more lumps in the bunk mattress, the cabins may be cleaned less frequently and well, and dinner may be worse and worse cooked. There may even be the odd fly in the soup. But the passengers are not anxious to leave the luxury liner for the lifeboats, and are happy to trust the Captain who says the ship is unsinkable rather than the weatherbeaten and disreputable old matelot who says they should be looking instead to the condition of the lifeboats. Until the iceberg hits…
Then they will remember – and in that hour heed and turn to – the bloke who knew about the lifeboats. Rather than the more civic-minded seaman who shied from mentioning icebergs and lifeboats because it would scare the passengers, and instead just moaned about the failings of the Captain and the First Mate.
The endless long term rise is the price of petrol isn’t a dirty cabin or a fly in the soup of the system’s liner. It is one of a number of approaching icebergs, a dial heading inexorably toward the red line beyond which something will fail catastrophically.
There are others – food prices, the ethnic/demographic issues around immigration and relative birth rates, the increasing instability of the global economic system, manifest in the Bankers’ Slump and now the Sovereign Debt/Eurozone Crisis, and so on.
In all such cases we need to sound the alarm and advance a radical nationalist alternative. We need to let it be known we will be offering a lifeboat, not another bucket to bail, when the ship starts to sink.
Not a lifeboat the passengers need yet. For now they simply need to see a sensible locally-based alternative able to help them with day to day issues. We have shown we can offer that, win significant local and even European representation doing so, and build a credible small national party.
We can do that again. In that task our view on global markets and autarky should be no significant hindrance, provided we are careful to avoid crankiness.
We should be saying, sotto voce to some extent in public for the present but saying nevertheless, especially to our own members, that we think the current global market economy is unstable and unsustainable in the fact of growing global pressures of rising population and economic activity pressing against limited planetary resources – a view in which we are much less alone, and in which we have more and sometimes surprising allies, than some may think – and that we do have alternatives ready for the aftermath of its collapse when they will be needed. And wanted, desperately.
For they will be needed and wanted. The global market alternative is to fight harder and harder for less and less in a world of more and more people. Not just in energy. We cannot be sure when we will reach Peak Oil. But sometime this century we will reach Peak People.
When the global population reaches and then exceeds the total available planetary resources of oil and other energy. And, more basically food and water.
Like germs in a bottle of sour milk, humans have fed and fed and fed and bred and bred and bred until the food and resources are gone. Then, as with the bacteria in the bottle, our numbers will die back and crash catastrophically.
Our mission is to ensure as many of our people as possible come through that dieback alive, and our nation is still afloat at the end of the great civilization-shattering historical storm that will happen when the System’s ship founders.
Then, and only then, will our fellow passengers look to see and flock to those who can offer them a lifeboat. Then will come our hour of destiny.
We must not hide the fact that we have a lifeboat just because at the moment it upsets passengers who don’t see, as we do, that we are on a sinking ship. Far from never coming to power on a radical platform, we will only come to power on a radical platform. When desperate times demand the desperate measures we and we alone offer.