OMG - George Is Being Practical Again! Petrol Duty Frozen

When is a U-Turn Not a U-Turn?

I know I have only mentioned forecourt petrol prices in the context of Brent Crude prices falling and the effect that has on jet fuel prices.  However UK motoring and haulage  firmly costs are absolutely linked to the Brent price which today is just over $92 per barrel.  The near 30% drop in Brent prices recently has seen forecourt prices (mercifully) falling  to £ 129.9 pence per litre in my local garage which equates to £5.91 a gallon in the old pre-litre prices.

Today the UK's Daily Mail front page  trumpeted another U-turn by the Chencellor.  His last budget did produced some real howlers which he has since had to cancel to the media's delight e.g. VAT on hot pasties.......Only a Treasury accountant/economist could dream that one up!! 

However back to the "U-turn" today - Only it wasn't really a u-turn at all.  It was a cancellation of a budget  increase in petrol duty inherited from the last Government.  Mr Osborne apparently did not  even tell the PM about dropping the planned 3p per litre rise - the good news though is it will now be cheaper for the PM to go to his local pub with his family - maybe the savings can be put to use getting a tracker for his young daughter!.  Mr Osborne said today that including the cancelled January rise- also inherited from the previous Government motorist are now 10p a litre better off than under the Labout plans. 

Given the short notice of the announcement perhaps Ed Balls, Labour's shadow Chancellor, can be forgiven for calling today's duty freeze "...the fastest u-turn in history" conveniently forgetting it was the Labour Government who had introduced the duty rises in the first place - not the Chancellor. 

Given that we are in an austerity period the loss of revenue will not now help reduce the UK's deficit.  However the Chancellor claimed that the loss of revenue would be recovered from savings at the Treasury (Maybe from the Treasury Canteen no longer having to pay 20% VAT on pasties and hot pies....?)

Whilst the subject is topical it would be good to recall that drivers conribute a huge chunck of revenue to the Exchequer each year.  Last October the City firm of Wood Mackenzie published research which showed the breakdown of the pum price for petrol. Of an average price per litre of 134.1p SIXTY percent goes to the Treasury:-

Cost of the oil         45.2p
Refining Cost            1.5p
Fuel Duty                58.0p
VAT                        22.4p
That leaves 7.1p for the retailer.  Earlier in the week Transport Secretary Justine Greening, apparently unaware of the forthcoming announcement, said that the oil compaines should reduce prices rather than the Government forgoe Labour's planned 3p rise .  With 61 % of the price of a litre going to the Treasury and just under 2.5% to the oil companies perhaps the fairest option was George Osborne's decision not to add another 3p per litre.  I am all for U-Turns that make my cost of living cheaper!!! Bring 'em on!!