A Tuppence Extra?
Posted by Chris Vernon on October 2, 2007 - 8:00pm in The Oil Drum: Europe
Topic: Economics/Finance
Tags: duty, fuel, petrol, taxation, united kingdom [list all tags]
On Monday the 1st October 2007 the UK government increased the duty on a litre of petrol and diesel by two pence taking the duty to 50.35 pence per litre (ppl). This is the first of three increases announced in the last budget. Duty will be increased by a further 2 ppl on 1st April 2008 and 1.84 ppl on 1st April 2009 (Duty Rates .pdf).
The increase has been almost unanimously criticised by the UK motorist, not just because it’s a tax but because it takes UK fuel prices perilously close to the psychological barrier of £1 per litre. On the www.petrolprices.com site a survey receiving 80,000 votes in just a few days indicated 90% in favour of the following statement:
Should the government do a U turn and scrap the extra 2.35p tax on fuel because of unexpectedly high oil prices already hitting motorists hard?Despite everyone talking about petrol prices it seems that many people don’t understand how that price comes about and certainly have no awareness of the approaching decline in global oil production.
- Price of the product
- Excise duty
- Value Added Tax (VAT) - a percentage
The price per litre at the pump is simply:
- Price of the product + Excise duty + VAT
In September 2007 the UK national average price stood at 95.2 pence for unleaded 95 octane petrol (AA fuel price reports). With an exchange rate of $2.04 to a pound that is equal to $7.39 per US gallon. Working backwards we can see how the UK price is arrived at:
First the VAT at 17.5%, which on 95.2p is 14.2p.
Second the duty, which until 1st Oct 2007 stood at 48.35 ppl.
Subtracting the two forms of taxation from the sticker price leaves a product price of 32.67 ppl or 34% of the sticker price. The taxation therefore accounts for 62.53 pence or 66%.
Increased Duty
With the recent 2p (2.35p with the additional VAT) increase taking the duty to 50.35 ppl and assuming the product price remains the same the breakdown will look like this:
Response to Product Price Change
If the product were to increase in price by 30% (approximately $100 oil) from 32.67 ppl to 42.47 ppl what would happen?The sticker price would become 42.47 + 50.35 + 17.5% = 109.06p. An increase of only 11.8% and the rate of tax would fall from 66.5% to 61.1%, albeit increasing by 1.71p per litre.
A feature of a high fixed taxation, the excise duty, is this damping effect of product price variations on the sticker price. In countries with little or no element of fixed duty such variation in the product price would have a much greater effect at the pump.
The petrolprices.com Survey
It’s fair to say the vast majority don’t like this duty increase, despite it only keeping up with inflation. I on the other hand welcome it and the subsequent increases already announced (yes I do drive a car, albeit a relatively efficient diesel).It is clear that the UK will have to use less oil in the future. In 1999 the UK was the 9th largest oil producer in the world. A third of the country’s North Sea oil production was exported delivering billions to treasury coffers each year. Since that peak year, production rates have fallen dramatically. So far in fact, that in 2006 the country was a net importer of oil for the first time since 1980. The treasury receipts have been replaced with a growing trade deficit, a trend only expected to continue and to be exacerbated by any increases in the price of oil.
Increasing reliance on imported oil against a backdrop of tightening global supplies and in competition with the rapidly expanding economies and healthy trade surpluses of India and China presents the UK with a problem. Maintaining the current oil consumption of 1.7 million barrels per day into the future will become increasingly expensive and ultimately no longer viable.
High and increasing levels of duty on fuel are certainly not the whole answer, but they provide a degree of price control, damping future volatility and providing a strong price signal in advance of that delivered by the actual price of oil. This advanced price signal has two advantages, it reduces consumption from what it would otherwise have been by encouraging more efficient vehicles and reduced vehicle-miles travelled and also delivers revenue to our government in the form of tax receipts rather than wealth transfer to oil exporting nations.
It can be argued fuel duty is regressive, affecting the poor to a greater extent. However this can be mitigated whilst maintaining the benefits, through a tax credit.
So why is the majority opinion against the increase? Because, in my opinion, they are thinking only about the direct and immediate impact on their wallet and are simply unaware of the structural changes oil depletion will force upon the country in coming years.
What does The Oil Drum think? Should the fuel duty in the UK, already with some of the most heavily taxed fuel in the world, increase further?
It's a no-brainer. The gov is doing this to send a clear signal: they aren't going to lessen the taxes just because the oil is high, so don't expect a free ride. It sends a message to the people to drive less, to increase mileage, to conserve.
So... it's not that it is bad. It seems though too thin an increase. It is as if the government is poking with the public to see if people will riot or not. For me, as long as the country doesn't enter poverty, anything to increase the petrol's price is welcomed.
I can't say I agree.
While the article echoes what I've said several times in the past about extreme taxation damping the effect of resource price rises, there is another aspect.
As the price of oil rises, certain countries where tax is low (such as the US) will be significantly adversely affected causing demand destruction. This is the flip side of the lack of action to reduce demand over the years. However as the oil price rises it increases the need for the UK government to reduce tax to maintain a working and viable economy that is not in recession. That in turn is needed to take the 'clear and present danger' presented by the demonstration of peak oil and turn it into significant action by the whole economy. Without these cuts in tax the economy grinds to a halt and none of this action takes place, ever.
The government has to have a policy plan for progressively reducing tax on oil to zero over a period of years, coupled with a plan for mass conversion to low oil intensive system-structures.
Now, on the brink of a global recession, is not the time to be adding a straw to the camel's back.
Reducing tax as the oil price rises removes ALL price incentive from the private sector to invest in low consumption technology at the same time as reducing government tax take, and available income for investing in alternative energy infrastructure. Net result, when the tax take falls to zero, the public gets a huge price rise shock that they are even less prepared for, and the government has invested NOTHING towards offsetting it.
What can easily be done by individuals has been done at the current UK tax level. Further action will only be taken in the face of clear immediate threat. The reduction in tax as the price of oil rises swiftly is only to mitigate the immediate effect of those rises - individuals still realise that a) one day it runs out b) others in other parts of the world are really suffering. Thus it acts as an enabler for action with the drive coming from elsewhere.
In essence high tax levels give you two bites of the cherry, they reduce demand early and they sustain investment capability longer - provided you use them right.
I can't say that I agree with you. Higher prices equals more motivation to mitigate and change lifestyles. If the government starts to send the signals that everything will be just OK, cause the gov is backing you up with lowering taxes, it may work out very well for the first years, but then you will end up pretty unprepared for what is to come.
Exactly, where's the thing not to like? We must ALL move out from FFs. The nations that do this first will be more prepared to face the uncoming crisis than the ones which don't.
So it's a matter of sight. If your sight is about 5 years long, tax increase is wrong. If your sight is about 20 years long, tax increase is the right move. It's like chess. What they did was to sacrifice a pawn. Seems stupid, but only to the ones who don't know how to play chess, as in the next 20 moves, it will strike as a brilliant move.
Well it would be, if the sacrifice was harder. Even so, it sends a clear message: you people are on your own, so start mitigating. Start conserving. Stop SUVing. etc. I'm all for it.
Planning horizons for most political, business and individual psyches are about 3 years, with attention falling off markedly after that.
Thus the evidence as seen in others (the US in particular) failing because of ever rising prices will have much more effect than the threat of it in future in some arbitrary future.
The model I've outlined is in effect a smoothing function on the transition between a supply-rich and a supply-constrained world. Less shock, more attenuation of the change to match the rate at which people can adapt. Trying to make the system bend and not break.
The worst thing is if the tax is not reduced at the right time and right amount. Keeping the tax high as oil price rises push it even higher will cripple business and prevent investment in alternatives. As companies go out of business individuals won't be able to afford to invest - and basically the system breaks.
When I on occasion feel obliged to defend the similarly high norwegian fuel duty, I use this argument. It's not easy to understand for everyone, or maybe they just don't want to understand any arguments in favor of the tax.
I recently found an old receipt from a purchase of motor fuel carried out around the turn of the century. The price for that particular fillup was 9.09 NOK/ltr. Nowadays the price varies between 10.50 and 12.50 NOK/ltr. If it wasn't for the fact that it's mentioned in the news every time the oil price set's a new record I doubt the norwegian motorist would be any more aware of it than he is of the fact that norwegian oil production has been in decline for 6 years or so. (Seriously, I have yet to talk to a single person that knows this)
I usually compare the price of fuel to the price of a bus ticket. In my oppinion the price of fuel alone should be atleast twice the price of a bus ticket. A bus ticket is on average around 1 NOK/km I guesstimate. The average car I assume to use around 0.07 liters/km. 1*2/0.07=28.57 NOK/ltr. In other words, the price of petrol is still less than half of the target price.
GBP/NOK 11,08
USD/NOK 5,43
EUR/NOK 7,69
Yes, of course the tax should be raised further. We should increase the tax on petrol more than diesel so that petrol is the more expensive as it is in nearly every other country to aid a switch to more efficient diesel vehicles and increase the amount of vehicle fuel we can get out of a barrel of oil.
You cannot buy a right hand drive diesel Smart Car with its 88 miles per UK gallon fuel consumption for use in the UK. I suspect part of the reason is the lighter tax on petrol removes part of the incentive to own one.
Not that I would not advocate the same policy in the US, I really would, but have any of you looked at the message boards on GassBuddy.com?
I'd be scared of these people if the taxes went up.
Over the past year and a half, there has practically been a tax revolt when our state reset it's tax ($/gallon). It's reset every 6-months on the basis of average wholesale gasoline prices coming into the state.
What apparently does not occur for these people is that, yes, oil production is decreasing and prices of nearly all oil-derived products are increasing. But imagine their surprise when they found out that road maintenance can't be performed because thsoe products that require petroleum based products for maintenance have increased in cost.
Obviously a disconnect somewhere. Apparently they've bought the line of "trickle-down" (more like "trickled upon") tax theory that says the more you reduce taxes, the more tax revenue you receive.
The logical conclusion of this theory, therefore, must be infinite tax revenue is received once the tax rate is zero.
They don't have to "buy a line of 'trickle down'" to oppose the tax increase - excuse me, "reset". All they have to do is to figure - rightly or wrongly, and whatever that means - that your state is already getting more than enough of their money in general and they see no reason why it should get even more. This is not necessarily connected with highway maintenance, as they may feel that your state is getting so much of their money that it ought to find some elsewhere in its budget.
Except the common complaint is the conditions of the roads.
As I said...a disconnect.
As an aside, the fall of 2003, a local candidate and I had this rather interesting 'discussion' (it was civil, just a very strong difference in opinion). Her position was: the problem that would have to be grappled with is having enough cars for (low-income) people who wanted them (so they could "go to their jobs" which she also hoped to encourage by being on the local council).
Here we are at local election time and four years later. Gasoline has gone up by 75% (meaning highway tax revenue has also increased). Can't say there have been many "new jobs" created but it sure is much more expense to drive to work than it was four years ago (for those that don't car pool or ride the bus, though the mass transit system has improved somewhat).
I think this is the wrong approach since it doesn't explain
1) why it has to worsen the natural wholesale price rise
2) why fuel saved in the UK won't be used in China and India
3) whether governments will squander the revenue.
A better approach would some form of disguised rationing or a measure which eases price rises if motorists back off. For example nonstationary emissions could be included in the European Trading Scheme along with some other serious bug fixes. Using the recent price as a baseline there will be an extra carbon component. If the cap stays the same and people take the bus then the fuel price rise could stabilise. If they keep driving V8 Range Rovers the fuel price goes up even more.
Other schemes are discussed in
http://www.cfit.gov.uk/docs/2007/climatechange/pdf/2007climatechange-ets...
The excise duty should be calculated and used to pay for:
(1) removing CO2 from the atmosphere
(2) repairing all other environmental damages
(3) cover all health costs
(4) maintaining roads, traffic lights etc.
(5) research and development of clean(er) fuels
(6) building up public transport for the post peak oil era
Anyone with numbers? What have I forgotten?
2) why fuel saved in the UK won't be used in China and India
That is a GW/resource issue. The immediate UK problem is that the country is getting poorer. It is important to reduce our imports by discouraging oil use in the UK.
Ingenious rationing sounds good if you have a good scheme.
We seriously need to hypertax vehicles that consume even slightly worse MPG than a chosen value ie vehicles that have more power and weight than they need to have. They threaten to do this through road tax every year but they dont have the balls to really make it hurt. This is not just for socialist conspiracy reasons. The reason is found in the engineering phrase 'impedance matching'. If you have car A and car B, where A is 2 x the size, power etc, unfortunately, it doesn't consume twice the fuel of B when used identically because the load does not double. Yes it carries twice the weight up hills - then it rolls down. And most of the time its rolling flat. A tax on fuel actually penalises the low power engine more AS A PERCENTAGE OF ITS AVAILABLE POWER.
To make consuption go down.
Well, I can't garantee that. It is up to the UK citizens to keep their government honest and minimaly efficient. But even if the governemnt does sqander the revenue, its main objective, that is reducing consuption is achieved.
Now, the best one:
That is China and India problem. Because of the taxes, UK will be less dependent on oil while prices rise and will spend less money importing it. If China and India choose to stay unprepared and send their money away buying something with decreasing supply, too bad for them.
Demons are good things to attack. Shoot them with silver bullets, drive stakes into their hearts, and if they are inanimate objects that people need, then tax them so that the people using them will clap their hands in joy, not realizing that it is they, not the object that is being taxed (plundered).
I say that if the Brits are too out of touch to realize that their government is using a human calamity as an excuse to take more of what working people produce, then they deserve the butt f**king that they are getting. Sell them some KY Jelly to ease their pain, and to make a little profit to boot.
I'd have to agree. Tax is tax and nothing more, nothing less. If the government wanted to send a message then it can simply tell everyone, if it wanted to ensure a reaction it can legislate.
Tax payers money never goes towards anything good and usually finds its way into the coffers of those with the Government's ear. People wanting more taxes is pure insanity, besides the point that it doesn't work and horribly distorts economic activity, it is plain stupid.
Besides, recession will work much better at reducing consumption and we shouldn't have to wait long for that to appear.
High duty which the country can withstand is a useful gov economic tool. If times get bad the gov can freeze the duty, or in desperation reduce it. It follows the same logic as hoarding goods because you know the price will increase. As noted by Chris, it reduces price changes due to the resource.
Eg hypothetically - if next year all world govs confess to peak oil and said '10 years it will be 10 times the price' I would expect the Gov to freeze the duty.
deleted ...
Really? So what are you driving your car on, pray tell?
Right on gregorach!
Have you ever been to a country without a functioning tax collection system? There is very little infrastructure. Corruption is rampant. Quality of life is low, there are many homeless people in the streets. Children who can barely walk are begging for change. Children are not educated unless they are in the solid middle class. Investment is minimal. It's horrible. And trust me the private sector/private giving does not step up to the plate.
We can improve our allocation of funds, but taxes do provide a large number of public goods.
Any solution to peak oil, global warming and poverty will depend on wide or universal access to contraception.
Good point CMDC, I've spent some time in Senegal and the lack of centrally funded infrastructure is really apparent. Just little things, road signs, waste collection, paved roads etc... there's a real sense of "if you want something you have to do it yourself".
Exactly. My usual response to hard-core tax-hating Libertarians is to point out that their government-free utopia already exists and they're quite welcome to go and live there. It's call Somalia.
The time for timing is here.
Just in time the walmart jockey says
Just in time on the dime spin the wheels
Just in time the peak is here
Spun the wheels on the new
Car yet?
The guy down the street for
1,635 USDollar gives his old car the boot
The impaled impala is FleXFuel
E-85
No where in town
No stations are missing out
On his money
He has to buy gas
No where in town the E-85 bird flies
The Lord of flies
Filed this report
The retort
I'll tell you
Is fast the down slope
Faster still
I sit on a window sill
Now the thrills are gone
I am retired you see
A tup-Pence is not my wage
I asked for Higher salary
I wanted a Penny a day
In God We trust Our money says
What does the Brits say
I don't know
But I'll ask you?
eeeeewwwee,, I smile BS here
Again someone is playing games
With my money
Your money two
Markets
The bottom Line
You in the bread line too
I will be today in a few
I serve the Homeless
My retirement plan you see
Help the helpless
The hopeless
The crazier than the me Id's
Ego's
Libidos
I promist,, the promise
Mist the dew
hand me a Mountian dew Dude
I on down hill slope duty today
Sky patrol
Where do you work
Who so ever do you trust
I know who's name is on
My penny
My 2 cent's worth,
1982 old coppers of course
Everything else is not worth
anything it is all HOT AIR
Charles Edward Owens Junior
Check me out, My mail's in the profile
WEb blog too
I am Not dead yet
I have not gone to bed yet
Pushing 40 hours up now
bye bye buy buy by by lines
Chris, I agree that higher tax on oil consumption is required and that lower tax / greater incentives for UK oil production are also required. When prudent Mr Brown chickened out of petrol tax increases in 2000, he added the tax on the off shore producers instead, thereby encouraging the consume more, produce less paradigm for the UK economy.
As you point out though, high fuel taxes have a massive de-gearing impact on the rising cost of the underlying product and price based conservation is therefore muffled throughout Europe. In reality, we actually need a much more progressive tax on fuel if folks are to be forced to consume less. This, however, would be inflatioary and discriminatory.
So personally I'd prefer to see legislation on car engine size, power, efficiency and speed limits as a first measure for reducing consumption - does anyone know what the savings here might be?
Off topic - we are in the UK facing an allied problem with fixed interest rate mortgages where recent interest rate rises have not been felt by millions who remortgaged at around 4% fixed in 2003/4. The interest rates for millions will rise to over 6.5% between now and Christmas. Those who are paying interest only will face an over 50% rise in their mortgage payments.
I've been talking to several different bank managers recently to be told that the banks are now carrying a significantly higher level of open bridging - those who have bought a new house and have yet to sell their old. Furthermore, since the banks are being squeezed now, arrangement fees for new mortgages are set to escalate - from a few hundred to well over a thousand pounds.
Sorry for the digression - below is a chart showing the impact of rising oil imports on UK trade balance:
UK Energy Security on TOD E, July 2007.
A good start would be if the government enforced the existing 70mph limit on motorways. At present, I estimate a half of all drivers drive at 80+mph when the roads are not congested. Reducing and enforcing the limit to 60mph would reduce consumption on these roads by 20% or more. Travel times would increase marginally, but congestion would be reduced, because
the speed differentials at junctions, etc., would be reduced. The 'tail backs'
would build more slowly. I'm not sure what the percentage of fuel consumption motorways represent, but it must be significant. Also, if more
drivers accepted that driving at 80mph would see their licence revoked and their car crushed, the fashion for unnecessarly powerful cars might fade...
Bravo! If the Government want to send a message and make real progress on our excessive use of energy this is exactly the kind of thing they should do.
I fined it absolutely incredible that bright, educated people, believe adding taxes or increasing them will achieve anything other than unintended consequences. Giving more money to idiots (who probably use it to increase energy consumption) and forcing the poor and the aged off the road will achieve nothing. I wish people would wake up to the fact that governments are a problem, not a solution.
The UK is in a dire situation and only a wholesale change in the way people live and work can come anyway near mitigating the problem. Government cannot make this enormous change, the system within which they operate does not allow it (and this applies to all colours of government). Only individuals can make the change and by doing so improve their own chances in a rapidly changing world. They will also have to go against the Governments wishes in order to do so, as such individualism will threaten the economy and the State.
I'm not suggesting increased duty anyway near mitigates the problem, just that increasing duty is better than reducing duty – which has been be policy of late by holding it frozen against inflation. Over the last decade the real cost of motoring has fallen which has unsurprisingly led to increased usage. That’s a trend that will reverse, ideally in a controlled fashion in advance of oil supply related shocks.
The problem is not the cost of motoring, it's the way the economy is structured. People have little choice regards the extent of their motoring because they quite simply have to work. To correct this people will have to work close to where they live and also be close to friends and relatives. Without such work and living arrangements people are forced to accept any cost to continue motoring. Governments simply cannot fix this, only individuals can.
To change the subject slightly, what happened yesterday with gas supplies and electricity production (3 oil fired plants having to come on line)? Plus the problem with irregular flows through the Langeled pipeline throughout the summer?
There is a lot of this idiocy around, common american "know-how" that somehow governments are bad, taxes are the worst, so laissez-faire should be done. Newsflash, that is AMERICAN IDEOLOGY, not exactly the "truth".
I'd ask you a question, what is the mileage of the USA? Compare it to the UK? Right. Thought so. Why is that? Because of TAXES.
And then these people contradict themselves. The economy's faults were created mostly by laissez faire politics. The suburban sprawl is greater in cities without central planning; cars are more abundant in cities who haven't mass transit politics, trains, buses, etc. Are you waiting for Rockefeller to build railtracks? Wait forever. Who is going to retrofit our cities, other than governments? Who has enough authority to bring down consumption in a large scale?
There is nothing wrong in governments, EXCEPT when they are poorly leadered. USA is only a perfect example.
To take out people from motorways is a great way to improve mass transit. Yes, the poor will be the most affected, but they would be always the most affected by peak oil anyway, so that's not even a choice we're making. And what's worse: to give money to native idiots or give money to tiranic foreigners, creating more war tension around the globe?
Governments are not the problem. People are. I wish you would wake up to that fact.
"The suburban sprawl is greater in cities without central planning"
Alas, what you really mean by such as this is that, by dint of some opaque process, you know better than anyone. That gives you the right, for example, to forcibly cram Americans, Soviet-style, into central-city chicken-coops few wish to live in. Or to cram them, Soviet-style, into overcrowded, germy, pokey, unreliable transit vehicles few wish to travel in.
Your intended victims may disagree with both your assertions and the sheer arrogance of the manner of their expression. Some may even disagree quite vehemently.
The decision is whether to cope with high gas prices when they become unavoidable, unpredictable, and sudden, or whether to cope with them now, gradually, voluntarily, with time to improve the situation (such as building more + better transit vehicles).
Well, it may also be that the UK has around sixty million bodies stuffed into an area about sixty percent the size of the state of California. You do the math. Nearly 30 million automobiles trawling a pretty small place. But then, you knew that.
Wherever you travel in the UK you're never further from the coast than sixty miles as the crow flies. The distance from Lands End to John O'Groats is just about 900 miles. So, maybe, just maybe, it has an awful lot to do with geography. Maybe taxes have something to do with fuel consumption and miles driven, but I can assure you in the South East where I live there’s no surfeit of motor cars. And people do use them. No matter how long it takes to get where they’re going. Not to mention the reduction in both rail and bus services. Both of which I can personally attest to.
Well, you must be very proud of the great achievements of Thatcher, Major, Blair, and, last but not least, Brown. A litany of true leaders. I’d want all of these, and maybe more, to be part of my lifeboat dream team, let me tell you.
Ah yes, the usual “fuck the poor, they don’t count” comment. How truly enlightened. I hope one day you experience the pleasure of being poor. A more deserving soul would be hard to find.
What joy to observe the antics of such a pure example of the prototypical fascist collaborator. I know it will come as a big surprise, but waiting for your government to save you from the evils of consumption and to bring about the benefits a city retrofit could confer… You might want to try this simple experiment. Put this reliance on your government in one hand, and then cup the other hand and piss into it. See which fills first. Even luisdias will not be troubled in determining the outcome., The “truth” so to speak.
While people may indeed be the problem, there’s no compelling evidence governments are any less a part of the problem. At least the ones I assume we’re considering here, such as the US, the EU twelve, Scandinavia, and Switzerland. That should about cover it. Not to mention transnational corporations, and various NGOs such as the UN, NATO, the World Bank, and the IMF.
Why is it the austerity programmes enforced by the World Bank and the IMF never seem to include the elite? We’ve already decided the poor are fucked so they don’t count. What about the beleaguered middle and working classes? Why are these the poor sods who get to take it in the shorts while the bastards that asked for the cash get to stuff it away like squirrels in numbered accounts in banks on Caribbean islands? Why is that? Oh yeah, I forgot, governments are always looking out for the well being of their citizens. Except the poor of course, after all they’re fucked.
Sadly, many of those governments have been complicit in all manner of shenanigans. But let’s not forget some of those other shinning examples of governments that have been so efficient and effective in compelling their “citizens” to behave in ways that are for their own good. I’m sure since luisdias is one of the brighter sparks to be found, wherever bright sparks are to be found, it won’t be necessary to enumerate them.
Put your faith in those guardians of your well being, by all means. Just don’t expect everyone else to share your unfettered enthusiasm.
Actually, reducing traffic volume on surface streets would be a far more effective strategy. Since most journeys are under five miles, our surface roads would benefit immensely from the reduction in the sheer weight of traffic. Busses would be able to run to schedule. With greater demand for busses, more busses could be scheduled. Cycling would be less like a suicide wish. Pedestrians would be able to cross the roads without fear of dying before reaching the pavement opposite. Reduced traffic would mean reduced noise pollution and reduced air pollution. That seems like a nice idea.
We could also use Monbiot’s proposal to turn the motorways into city link coach express ways. Interesting idea, I have to say. Since you’re so clearly so much greater in the intellect stakes than most of the rest of us, including the poor who don’t count anyways, I’ll leave it as an exercise for the luisdias to source the proposal.
The economy is structured that way in part because of the low cost of driving. In planning whether to build a tram system or a new highway belt, a township implicitly takes into account whether gas is 1₤/litre or 3₤/litre. In planning where you want to live and work, you take that fact into account. In deciding whether you want to live alone, or have roommates, you take that fact into account.
In the short term, petrol price elasticity is very, very low - adapting requires changing the way you life your life. In the long term, it is somewhat more measurable: commutes are cut, people refuse to live far from their work, they discover that driving to Paris on holiday is almost as nice as driving to Spain. In the longer term (town planning, investment, and development timeframes), it is enormous - it literally shapes the geography of the nation, as seen in US suburbia versus European towns.
The UK would be in far more dire situation right now if we had not had high fuel taxes for the last 15+ years. We would be driving far larger gas guzzlers, our balance of payments deficit would be far worse, and the poor would be in dire straits as they genuinely wouldn't be able to drive. Just look at the USA today.
As I look around, I find that even with these high taxes, the poor of the UK do not drive significantly more fuel efficient cars than the middle classes (The rich like to show off their profligacy). This is in part that the poor buy second hand cars, and in that market fuel efficiency adds to the price, but mostly it is because the cost of fuel is still too low to drive the market.
Also, it is overwhelmingly obvious from feedback websites that the lower income bracket see unlimited access to cheap fuel as a GOD GIVEN RIGHT. This short term attitude probably is part of the reason many of these people are in the lower income bracket to start with... but it also clearly shows that relying on UK individuals to show personal responsibility in this emergency is doomed to failure.
I contend that higher fuel taxes will help to wean this country off oil, even if the government spent the money burning North Sea oil straight out of the pipelines.