Anyone understand HJ's point in today's 'paper? Does he mean capping at less than the current prices the total cost [which is £1.45 per litre], or the actual cost of the diesel fuel pre taxes [£0.73]?
Either way, is the PM is legally able to cap the sale price? Further, why would the producers sell the stuff at a loss - given that they must pay the market rate for the cost of oil? The major fuel sellers only make on pennies per litre. The large profits they do make are surely needed [IMHO] for the massive investments in new oil fields [deeper and more costly to extract]. And no I'm not in the business! Am I wrong?
One answer might be to cap the tax take as a proportion of the new fuel sale price. HMG is taking much more in fuel tax this year than last.
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I can't see any attempt to cap the RRP of fuel. The complication on taxation is that it's two taxes - fuel duty, which is increased annually or otherwise, and VAT, which is 17.5% of the base price (variable) and the fuel duty (fixed). Hence the Chancellor a) takes a tax on a tax, and b) makes more/less money as the base price (which is a function of the price per barrel) rises/falls.
It would make life quite complicated for accountants and HMRC if the VAT was also a fixed amount per litre, though it would be seen by many as fairer.
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I don't see why the government shouldn't cap.
According to this morning's DT, the increased cost of oil has lead to the OPEC nations making as much from it in the first half of this year as they did from the whole of last. We all know that the oil companies are making profits and that the more the cost goes up the more does the tax take.
Seems irrestible to me to conclude that the only loser in the equation is, er, you and me.
If the government can interfere in an industry suffering bad times, eg banking and Northern Rock, where's the reasoning that says it can't interfere in an industry doing extremely well?
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If the government can interfere in an industry suffering bad times eg banking and Northern Rock where's the reasoning that says it can't interfere in an industry doing extremely well?
They already do, its called a "Windfall Tax"... it would be ok if they used the funds sensibly... but they don't!
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Just more of the same old drivel that we are accustomed to read from HJ - why would they sell it at a loss?
The only result would be that Diesel wouldn't be sold in the UK - plenty of other places abroad where it could be sold. Alternatively other hydrocarbon fractions would have to go up in price accordingly. Why should truckers be special?
Not even worthy of the Sun or Mail. The Telegraph irritates me increasingly with the nonsense it has taken to publishing.
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So you cap the price of fuel. Do you then cap the price of bread, milk, bottled water, ice-cream and every other retail item?
HMG only maintains price control where the seller has a monopoly, such as mains water.
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Just more of the same old drivel that we are accustomed to read from HJ - why would they sell it at a loss?
The point (I think) he's making is that the oil companies (and/or their crude oil suppliers) still regard the UK as 'Treasure Island' - i.e. they can sell their fuel here at a greater profit than anywhere else in mainland Europe - much like the situation with cars prices a few years ago. I don't know the relative profit margins involved Europe-wide or any 'local' peculiarities with the UK retailing process that makes the pre-tax price higher - but if there are no (or negligible) differences in cost of production or retailing - he has a point.
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So you cap the price of fuel. Do you then cap the price of bread, milk, bottled water, ice-cream and every other retail item? >>
Not necessarily. But the Common Market, as we used to call it, once intervened in butter and wine and there were mountains and lakes. And the EU still encourages agribusiness by subsidy, doesn't it? And do farmers stll get set-aside payments? And are there still tax breaks for investment?
Government intervention in price is more common than you'd think and I can't really see what's wrong with setting a maximum price for a staple like bread, either.
But I digress from cars. Anyone want to predict the price of unleaded at the end of the year?
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.. peculiarities with the UK retailing process that makes the pre-tax price higher -
Ignoring the illthought opinions of some armchair Economist Gurus, and before entering in to a debate, I did a quick search to try to find the facts. The best and the latest info I can find is this claim [ fact or fiction, I do not know]:
latestnews.virginmedia.com/news/uk/2008/05/29/brit...x
29 May 2008 07:08pm
UK diesel prices are the cheapest in western Europe before tax is added, Government figures reveal.
But once taxes are imposed on the fuel, the average price at the pump is higher than any other European Union country.
The figures show taxes made up 58% of the total price in April - the highest in Europe - raising the cost from an average 48.8p a litre to 116.6p.
Pre-tax unleaded prices for April were the third-lowest of all EU states, at 41.2p a litre, but after tax and duty the 107.6p cost meant 18 other EU countries had cheaper petrol.
Edited by jbif on 11/08/2008 at 17:09
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The best and the latest info I can find is this claim [ fact or fiction, I do not know]:
Here is another source of information - which I class as reliable:
www.ukpia.com/fuel_prices_historic_data.aspx
"Please note that due to the constraints of competition law, UKPIA is not able to show or comment upon current pump prices, 'current' in this context meaning data less than three months old
The latest pdf file they have is "Publication Date: 24/07/2008"
1st figure is UL 95, 2nd figure is Diesel
EU Pump price comparisons Excl duty/VAT Pence per Litre
January - April 2008
UK 39.51 45.21
Netherlands 43.38 49.44
Italy 44.43 51.43
France 43.60 49.61
Germany 40.08 48.50
Belgium 44.04 51.26
Luxembourg 44.55 48.05
Spain 42.62 48.65
Ireland 41.15 47.45
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"And the EU still encourages agribusiness by subsidy, doesn't it? And do farmers stll get set-aside payments?"
Almost all price-intervention in EU agriculture is gone, and what is left is going very soon.
news.bbc.co.uk/1/hi/world/europe/4407792.stm gives info on the current situation.
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Ignoring the illthought opinions of some armchair Economist Gurus, and before entering in to a debate, I did a quick search to try to find the facts.
Perhaps you didn't understand my comments jbif, but I suggest you re-read them instead of jumping to conclusions - and there's really no need for rude comments, thank-you.
Your selective quote of mine:.. peculiarities with the UK retailing process that makes the pre-tax price higher -
...rather inverts the meaning of the complete paragraph:
I don't know the relative profit margins involved Europe-wide or any 'local' peculiarities with the UK retailing process that makes the pre-tax price higher - but if there are no (or negligible) differences in cost of production or retailing - he has a point.
My first paragraph:
The point (I think) he's making is that the oil companies (and/or their crude oil suppliers) still regard the UK as 'Treasure Island' - i.e. they can sell their fuel here at a greater profit than anywhere else in mainland Europe - much like the situation with cars prices a few years ago.
Is my understanding of the point made by HJ about speculators & the widely accepted view that they're partly responsible for the rapid rise in crude oil prices.
I might also point out that the figures you quote are at least 3 months out of date & don't reflect the current situation of prices driven not only be demand, but speculation on that demand.
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I might also point out that the figures you quote are at least 3 months out of date
No need to, as I pointed that out in my post.
Come back in 3 months and I shall gladly post the figures for the May to July 2008 period. Until the figures are released, you and I can only speculate!
.. prices driven not only be demand, but speculation on that demand
That applies all the time that you buy or sell any commodity in a market based economy. Oil prices have not just suddenly become exposed to what may refer to as "speculation".
Edited by jbif on 11/08/2008 at 19:19
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HJ for Dictator. Lets have a putsch and put him in power. No need for any future democracy, he can control all the prices of everything.
Or not. What drivel.
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As I recall it this is supposed to be a conversation in your local pub.
In my local pub someone who kept describing what others have to say as drivel might find himself inserted between the fruit machine and the wall. It's just not very polite and doesn't add anything to the debate, does it?
Back to cars etc. I've been following the debate on oil and speculation with interest and though it's long been possible to speculate in oil futures it's been more worthwhile recently because of the drop in value in equities.
As I understand it (and I write from my armchair, of course) when you see the significant ups and downs in price in a day that we've seen in oil, large scale speculation is the only feasible explanation.
Anyone want to predict the cost of a litre of unleaded at the end of the year?
Edited by Optimist on 11/08/2008 at 19:49
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Anyone who blissfully imagines that speculators only got interested in oil in the last twelve months is totally unaware of the commodity markets. Everything is traded, and futures markets are made, and have been made for decades in all sorts of commodities, such as coffee, wheat, soya as well as all the metals. The Chicago Board of Trade, for example, was established in 1864.
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I'm already looking forward to seeing the winner at 31/12 of the oil price predicting thread which started around May 08.
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