I read with great interest that the OFT has decided that there are no shenanigans going on in the world of petrol retail in the UK.
It is of no surprise to me that the above linked article states that MP’s ‘reacted furiously’ to the report. I don’t think that the OFT reached a factually erroneous conclusion, but I’m convinced that MP’s, and the ‘honourable’ member for Tatton especially, were keen for the OFT to find that our petrol retail industry was a hotbed of cartel price fixing where fat men in suits sit around a table in a darkened room as they cackled like Disney movie villains at how they’ve shafted the public.
The report from the OFT is a clear confirmation of what we already knew, that being that pre-tax, the UK has some of the cheapest road fuel prices in Europe.
Without doubt the cost of crude oil has rocketed, and coupled with the value of the Pound which has been on a continual slide against the Dollar (the currency in which oil is traded) means that real cost of petrol and diesel has been pushed up.
However, when Ministers allege that the public is being ‘ripped off at the petrol pump’, I get the distinct impression that they had not developed a much needed sense of self awareness, and were rather hoping that the OFT were going to paint the retailers as the villains of the piece. The fact is, they just aren’t. Indeed the business of petrol and diesel retail is a game of minute fractions.
Many of those filling stations you pass on the road may be badged up with the logos and devices of the big petro companies, but they are in the main individually owned franchises, and they are operating on the thinnest of margins. The below illustrations from PetrolPrices.com shows how a litre of fuel is broken down:
As you can see, the retailer is earning 5p per litre, for the guy running the franchise this is not the road to untold riches. The obvious figure is the fact that the duty we pay on a litre is actually more than the cost of that litre itself, then there’s the matter of the VAT, in effect the tax on the tax is getting close to 50% of the base cost of the litre.
I get a real bee in my bonnet about this issue. Of course on a personal basis it is expensive and makes me cross, but unless it has escaped Osborne’s attention, we’re not exactly experiencing runaway economic growth at the moment. I’ll set ‘big business’ aside for now and concentrate on the ‘SMEs’ who do not have such an easy time incorporating this tax into their model. SMEs are lifeblood of our economy and no business model escapes having to factor in the cost of fuel at some point, even if they don’t have to move a product or a raw material at some point, the cost of fuel will have a direct effect on the wages that people need to able to afford to go to work.
I have no idealogical opposition to taxes, but the rapaciousness of government is killing this country’s economy. Fuel duty, and more gallingly, the tax tax, is the most hateful and immoral tax we have with the possible exception of inheritance tax.
Going off on a tangent for a second, I can think of no more disgusting form of tax than inheritance tax. It isn’t about multi-millionairres versus minimum wage slaves, it is about the individual working all their life, being taxed to the eyeballs, and then when they drop dead, the taxman rifles through their wallet before they go into the wooden box. It is an evil, horrible, indefensible tax and is akin to grave robbing.
Anyhow, back to fuel duty. This amounts to a tax on jobs, productivity, industry, retail, care, food, clothing, absolutely everything we consume, use and need. I just don’t get why this tax routinely gets hiked up, especially when this tax is running at 167% of the cost of the commodity being taxed. I for one do not feel like giving the Chancellor a thank-you when he makes a big song and dance about ‘deferring’ a 3p rise in duty.
A deferral suggests that fuel duty HAS to go up, in the same way that day has to follow night. So addicted is this government to taking our cash that the idea of cutting, really cutting, duty doesn’t even occur to them.
It really makes my blood boil that a government can act so clearly against the interests of small and big business, not to mention the actual individual on the street.
No government that perpetuates this level of taxation can possibly claim to be business friendly.
I remember the harrumphing from MPs when this OFT investigation was mentioned, they cynically tried to kid on that they were on our side. They made sympathetic noises about how expensive fuel was, and insinuated that these horrible petrol producers were holding us up by the ankles and shaking us until all our change fell out of our pockets.
We all knew it was a smokescreen, but the MPs hoped that OFT would find a smoking gun. They haven’t, because there isn’t one. There is a smoking artillery battery, and each of those howitzers is stamped ‘property of HM Treasury’.
So George, the question is this; having made such a fuss and a song and dance at the time, now the OFT report has made it painfully crystal clear who the snake in the grass is here, what will you hide behind now?
Conservatives are the party of business? Don’t make me laugh.