Err, whut?

The government often appears eager to appease the fuel lobby. One populist pressure group, Fair Fuel UK, cares only about the right of its 1.4 million members to drive their vehicles, full of cheap fuel,

What cheap fuel? Where?

UK fuel is already taxed at twice the rate that the Stern Review would set a carbon tax at…..

27 comments on “Err, whut?

  1. A bit disingenuous Tim, tax on fuel is not only for the purpose of offsetting carbon emissions. Driving causes a multitude of other externalities. Without valuing all those externalities we can’t determine if fuel is cheap or expensive.

    Years ago I asked Richard Wellings, a man with a PhD in transport and who is tumescent at the mere thought of an internal combustion engine, what the total externalities of vehicles is, and either he didn’t have a clue or wasn’t prepared to say.

  2. It’s sad that people are having to make their own plans to try to protect their children …

    Yeah, looking after our children is the government’s job, and parents should keep out of it. How dare these people take personal responsibility for their own actions?

  3. No, not at all. The fuel duty escalator was to meet our Rio commitments. It’s added twice the Stern carbon tax.

  4. That’s interesting, but irrelevant. The writer was talking about fuel being cheap or not and you are arguing that fuel is not cheap. Regardless of why it is cheap or not, you cannot determine if it is cheap without knowing if the cost of it (as part of a variety of motoring taxes) covers the direct costs and externalities of driving.

  5. It’s cheap until the tax is added. The supposed externalities’ are just an excuse to tax. The internal combustion engine has been one of the drivers of growth.

  6. It’s cheap if the people buying it consider it to be cheap.

    You’re arguing that we don’t know if the price of fuel covers the externalities, and if not then it should be made even more expensive. But that doesn’t mean it isn’t already expensive (or cheap.)

  7. I think magnusw’s point is that the COx emissions produced by the internal combustion and diesel engines are only part of the negative externalities that the usage of them produce. Thus a Pigovian tax on petrol and diesel will necessarily be higher than just the Stern carbon tax element.

    Of course, some of those costs are covered by the other taxes on motoring.

    I’d favour eliminating all current taxes on motoring and moving those costs into fuel duty so all externalities are covered by a truly Pigovian tax on fuel. I’d even tolerate the Treasury making it Pigou+4% so the tax is revenue-positive.

    That consolidated fuel duty would likely be much less than the current rate…

  8. If we’re going to consider all the negative externalities, which we should, then we also have to consider all the positive externalities.

    As rationaL says, its a driver of growth both directly and indirectly. Has the author considered it allows women to women to drop of kids with a preferred child minder and go off to work or to visit and look after relatives and the many other benefits society gets from having a flexible and mobile population?

    And as for the “fuel lobby”, most of us refer to them as voters.

  9. There seems to be concentration here on the negative externalities of the internal combustion engine. Ignoring the positive externalities. That the consumer buys fuel at the current price must indicate that the positive externalities must at least balance the negative & that consumers would be happier consuming more fuel at a lower price, more than balance.
    In other words, we can make our own decisions about externalities so fuck off.

  10. The places where the immediate negative externalities of internal combustion engines – fumes, noise, horns, jams – are most readily apparent are also the places where property is most expensive. So people obviously don’t mind those problems too much.

  11. The question as I understand it whether fuel is cheap here in the UK. Perhaps then magnusw could explain quite what the costs of producing this fuel, internal or external, have to do with it.

  12. The cost of running a car is not, and never has been, solely about the price of fuel. In my experience, depreciation, insurance and maintenance together form about two thirds of the cost. Depreciation is fiercest with a new car, maintenance most with an older car, and both increase with annual mileage. Moreover, the parking at the end of a journey often costs more than the fuel for it.

    If you have to transport more than one person, the car beats the train on cost. In many cases, the total journey time is less, because there is no standing round on platforms.Then it depends on how you value your time: the vaunted ability to work on the train is twaddle if you are standing in a corridor. Sometimes a journey by train needs a car journey at one end and a taxi at the other – the convenience of doing the whole lot by car outweighs any cost consideration. Also, it depends what you need to carry. As one ages this gets less and less, yet the car carries it with ease.

    If I were to make a point it is that the cost of producing the stuff is tiny relative to the government take. Forget greedy oil companies, it’s greedy government that is at the heart of the problem.

    From a politics point of view, one adjusts eventually to the price and then it isn’t a protest problem. Problems come when a rise in price is so fast one cannot adjust. I remember folks saying that they would have to give up the car if petrol rose to 50p a gallon: the ones who are still alive are still driving! That may have been 1976. (I can remember it at 3/- (15p) sometime around 1965!)

  13. As every single person alive is utterly reliant on the road network and the vehicles that use it, whatever made up ‘externalities’ you care to name can come out of the general fund, car owners alone have no need to bear the costs while the benefits are shared by all.

  14. The problem with truly applying a Pigovian Tax, should one wish to, is determining the true cost of all externalities, positive and negative. As Witchie indicates, these will actually vary from person to person and based on the type of journey.

    I’m inclined to believe that the benefits of cheap fuel for vehicles and, indeed, of cheap, reliable energy in general, far outweighs any costs. To believe otherwise, you’d have to believe in the CAGW bollocks of the likes of Gore, Greenpeace, IPCC and FoE rather than a more rational assessment of the influence of CO2 (negative and positive).

    The relative cost / benefits of petrol compared to diesel is a finer point within the broader picture.

  15. I’d favour eliminating all current taxes on motoring and moving those costs into fuel duty …

    That’s only valid if all the externalities come from burning fuel. There’s also the externality of ugly streets when people pave over their front gardens to make room for more cars. A tax on car ownership reduces that problem (although it’s far from ideal).

    The places where the immediate negative externalities of internal combustion engines – fumes, noise, horns, jams – are most readily apparent are also the places where property is most expensive. So people obviously don’t mind those problems too much.

    There’s usually a significant price difference between main streets and side streets. But I suspect that’s more related to parking difficulties than pollution.

  16. Andrew M,

    Classic illustration of the fact that externalities vary from person to person. I’d consider that a good thing if it lessens the likelihood of being woken up on a Sunday morning by someone mowing their little patch of lawn.

  17. Ah, the dastardly “fuel lobby”.

    Also known as the vast majority of working adults in the United Kingdom. Bastards, every last one of them.

    Also, who will rid us of the “food lobby”, the “clothes lobby”, and the infernal Caledonian jobby lobby?

  18. magnusw,

    “A bit disingenuous Tim, tax on fuel is not only for the purpose of offsetting carbon emissions. Driving causes a multitude of other externalities. Without valuing all those externalities we can’t determine if fuel is cheap or expensive.”

    That’s a ludicrous argument. Unless you’ve even taken a reasonable shot at calculating the externalities, you have no idea what they should be.

  19. When it comes to making a guess at the externalities, in the “benefit” column simply indulge in the thought experiment of taking all motor vehicles off the road for a week… 🙂

  20. Always label people who disagree with you (and in the case of the Guardian that’s 99% of the population) as a ‘lobby’.

    The Guardian is the “fool lobby”. Geddit?

  21. Pigovian taxation is supposed to correct a perceived “error” in the free market, where negative indirect effects (negative externalities) don’t get costed into the market price. Positive externalities, similarly, aren’t costed in either, but that’s irrelevant in the case of the petrol and diesel engines.

    All positive benefits of having the engines are direct ones, and reflected in the market. Direct negatives (having to maintain roads and railways, traffic control, etc) are likewise costed in.

    The Pigovian tax is supposed to cater for the indirect negatives (COx/NOx emissions primarily) and feed those into the market calculations by adding to costs. And then, it’s intended that the market kicks in and chooses the optimum.

    Like all state attempts to “direct” the economy, Pigovian taxation should be levied seldom if ever. I think it’s justified in this case; but I wouldn’t shed a tear if it gets knocked back..

  22. Why not just sue in nuisance? I mean, if I can prove on the balance of probabilities that Bloggs’ car’s emissions are harming me and, since I myself don’t drive it cannot be said I am harming Bloggs in an equal and opposite manner, then that’s the pure measure of harm and damage.

    Isn’t ‘externalities’ just the socialization, or the removal of moral cost, of/from my responsibility to seek the redress to which the law already entitled me?

  23. Fuel duties and VED raise about 7% of total UK taxation (roughly £40B)

    When contemplating the Pigovian Tax as a demand reducer one also has to take into account the negative effects that the Government spending of that tax has.

    The Government could impose a tax that when redistributed actually results in an overall increase in consumption (those at the bottom can now enter the market with their tax credits whilst those above them continue as before).

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