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Comment: Fuel duty enabliser

Comment: Fuel duty enabliser

Price is a practical and emotive issue. At £1 a pint, beer at my University bar was both affordable and enjoyable – and I still have trouble believing it's now almost three times that amount.

With the fuel protests a distant memory (when fuel was £1 per litre) and fuel prices above 135 pence per litre, filling-up is no longer affordable or enjoyable for many drivers.

No wonder then that the Government has shown keen interest in introducing a 'fuel duty stabiliser' (and may well have done so if you are reading this after the Budget). A 'stabiliser' acts to ensure that duty on fuel is reduced to balance any increase in the price of crude.

While there is no doubt that a stabiliser is a popular policy, and probably essential to ensure short-term economic recovery, let's just consider for a moment the flip-side; have there been any positive effects of rising fuel prices?

Well, the new car market has certainly changed. While new car sales in January fell by 12%, sales of the most fuel-efficient, lowest CO2 models increased by a staggering 65%. Combined with the impacts of the continuing downturn, this has further reduced the average CO2 emissions for new cars to 142 g/km. Good news for some manufacturers at least.

With the current rate of tailpipe CO2 reduction from new cars now at over 5% per year, average CO2 emissions from new car sales in the UK is comfortably on target to hit the 130 g/km target by 2013, in accordance with EU legislation. In this respect then, high fuel prices are good for the environment.

Innovation has also benefited from high fuel prices. Not only are hybrids common-place, electrification of the power-train is being driven by the need to deliver improved performance with lower fuel use. While plug-in electric vehicles are getting all the media attention, technologies such as start-stop are quietly being added to most model ranges as standard.

Playing the stabiliser card should come with a reality check on two counts. Not only does each penny off fuel tax deprive the government of £500 million a year, there is a limit to which any policy can hold back the inexorable rise in the future price of crude. Political conflict, peak oil and climate change will continue to force long term prices ever upwards.

High fuel prices therefore should be viewed not just as a problem, but also as an opportunity. While our inclination may be to pray for a fuel price reduction, we need to start planning for the world of £5 a pint.

©Dr Ben Lane, nextgreencar.com

Article also appears in the March edition of GreenFleet Magazine

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