Friday, October 17, 2008

Does Brown really think we're that stupid?

According to Gordon Brown,
"The public know that when oil prices go up, it's reflected very quickly in the pump price. What they want to know is, when oil prices come down, that is also reflected in the pump price. I want to see the competition between supermarkets and oil companies reflected in lower prices at the pumps"
Let's get something straight right now. When you buy a litre of petrol approximately 70p in every pound you spend goes to the Treasury in fuel duty and VAT. It's not the evil oil companies that are the problem, it's the Government, and that means him.


Anonymous said...

No Dizzy, but Gordon is.

The consumer knows full well that garages have very little power over the price at the pump which is why it only ever differs by a few pence in local areas. The price is determined mainly by the oil companies themselves and the garage owner/franchisee makes only 1 or 2p profil per litre.

Brown will never reduce the fuel duty, he will only ever postpone the increases as he thinks that makes him look like he's cutting taxes.

Paul said...

This is rather like a rapist going to the police station to berate the police for putting the poor victim through hell with all of their questions.

Old BE said...

Plus, while the oil price has been falling in dollars, so has the pound.

He is just pathetically trying to appear to be "on the side of the consumer".

M said...

Yes, he really thinks people are that stupid and some of them are indeed stupid enough to fall for it.

Dave said...

Who said "You can fool some of the people some of the time and they're the ones we concentrate on"?

Anonymous said...

Not to defend GB particularly, but the other side of the coin:

The tax on petrol was designed originally with the objective of reducing consumption, and internalising the negative externalities. That the Government has come to rely on fuel duty to fund public expenditure is an unfortunate byproduct.

However, reducing the tax as the oil level rises will only encourage the oil companies to push prices higher, as demand will fall but out of proportion to the rise in prices. Keeping the tax system as it is ensures that demand becomes elastic at a lower price, and forces the oil companies to keep prices down. Reducing the tax once prices go up simply keeps the demand inelastic and allows greater profits to go to the oil companies, while reducing the ability of the Government to act on the negative impacts of fuel consumption.