With news of more unrest in the Middle East and particularly Libya, the Brent Crude future price benchmark has jumped 5.6% to over $108/barrel.
So now would be a good time for the Government to give some relief to hard-pressed motorists by postponing some of the upcoming fuel duty increase, right?
Probably not. Because although it would give a short-term reduction in petrol prices, what we're seeing today is likely to be only a prelude to a decade of increasing oil prices. Reducing fuel duty, as well as making a big hole in the public finances, would give the signal that the current troubles are only a bit of choppy water, and in a few months we'll be back in the calm seas of cheap oil again and we can go out and buy more Range Rovers. While $108/barrel is a recent high, and UK retail petrol prices are at record highs, crude itself is still some way below the historic price high and many observers believe it will go significantly higher.
The Government really needs to get the message across that although a rising oil price is not a certainty, it is a good bet, and there are serious downside risks if we fail to prepare adequately for it. The simple fact is oil-dependency is bad for the economy. The best way to defend against the damage high oil prices will bring is to become less dependent on oil - to use less of it, by buying more economical vehicles and by driving less. If we do so, we'll have a competitive economy. If we don't, oil will be a millstone around the neck of the economy, depressing consumer demand, sucking wealth out of the country and saddling industry with increased costs. A government that can claim to good economic stewardship would not be afraid to give the message that people don't want to hear - that petrol prices will carry on going up and we'd better get used to it. The Government are quite happy enough to impose pain in the name of deficit reduction. Unfortunately, they've nailed their colours to the 'war on the motorist' agenda in pursuit of short-term political gain. They've protrayed motoring as a benign freedom to be enjoyed without Government interference. Right now however we're finding out that motoring has the power to sink the economy, as people stuck with long commutes in thirsty cars have to cut back their spending to fund their oil dependency.