At the start of every week, I get up, set off for work, and stop for fuel. When I started my job back in August, I’d put in £20, and a couple of days later I’d stop off again, put in another £20, etc. Granted, I do have commute which is just shy of 40 miles, but when you have to pay 137.9 per litre, no matter how you drive, what you drive, or where you drive, you do realise just where the bulk of your weekly expenses go.
And yet now, less than 6 months later, when I stop off I pay 107.9 per litre – a full £0.30 per litre less. That might not sound so impressive on its own, but look at it this way. Let’s say you put in around 19 litres – which is about £20.50 at 107.9 per litre – that £0.30 suddenly becomes £5.70, and if you fuel up twice a week, that’s a weekly saving of £11.40. To put it another way, for me that’s an entire days commute.
If Danny Alexander, the Chief Secretary to the Treasury is to be believed, it will only be a matter of weeks before petrol prices fall to the magical £1 a litre mark. His argument seems to be that there is a time delay between the price of oil falling and the oil companies passing onto this saving to us, the consumers. I can certainly see the logic, however, as with most words that come from a politician’s mouth, it is of course laced with irony. If the government reduced fuel duty for example, we would in all likelihood already be at the £1 per litre mark.
Dare I say it, if the government went one step further and reduced VAT back down to 17.5%, not only would fuel be cheaper, but many of the other things we buy (and in most cases drive to the shop to buy) would also be cheaper, enticing us to spend some of this additional income and help with the economic recovery. But I digress. From a political perspective, it is better to deflect the attention towards the mean, polluting oil companies, because that way, the credit can be taken by the politicians while they continue to reap the income. Even when they reduced fuel duty by 1p back in the Budget of 2011, to pay for this and the other price freezes (which when combined with inflation essentially equates to a price increase), they increased the little known ‘Petroleum Revenue Tax’ (PRT – first introduced by Harold Wilson’s Labour government in 1975 as a response to the 1973 energy crisis) charged to oil companies from 20% to 32%.
Even though the falling fuel prices aren’t the direct result of government policy (you could argue that the falling prices are a one by-product of the policy currently pursued against Russia), considering we are now in the run up to what might be the closest and unpredictable General Election we have witnessed in recent history (that’s right, even closer and unpredictable than both 1974 elections and 2010), it is certainly fortuitous. If Ed Miliband gets his way, the election will be fought on the issue of people ‘feeling the benefits’ of the economic recovery. What better way is there to feel the recovery than fuel being £0.30p a litre cheaper at the pumps?
Don’t forget, it isn’t just motorists that will feel the benefits of falling oil prices. With British Gas announcing a 5% price cut, we can prepare ourselves for cheaper household bills, while Danny Alexander has gone one further by calling for bus companies and package holiday operators to reduce their prices in line with the recent reductions.
Whether or not prices stay low until the election is one thing, but nothing helps win an election more than a lower cost of living. What wins elections? Always Remember – ‘it’s the economy, stupid’.
By Daniel Dean, Junior Writer for Daily Political View.