Is the government's fuel stabiliser a good technique?

[rov1100]

Or is it swings and roundabouts as in the end you finish paying the same amount?

[rov1100]

http://www.telegraph....-fuel-stabiliser.html

[New Judge]

The very idea is that you do continue to pay the same amount. When oil prices rise, the idea is that duty falls, thus keeping the price stable.

It would have been a vergood idea if it had been applied when petrol was 4/6d a gallon. It might even have been a good idea if it was introduced shortly after the General Election to fulfil a manifesto commitment when perol was about £1.16 a litre.

It would even be a good idea now, despite fuel having risen by about 12p per litre since Christmas. But somehow I don’t think the government will undertake to see its revenue at the mercy of rising oil prices. So, like a number of other promises made this time last year it will probably be kicked into the long grass and quietly forgotten.

[Toureman]

I think your dead right judge !

[rov1100]

Its all well and good to stabilise the fuel at its current price hoping that later the oil price will come down in the Summer when there is less demand for oil. We have not yet seen an end to the rise of oil so left to its own devices would climb higher than at present.

Come Summer when there is less demand for oil the price in normal times would drop but with this stabiliser it would not. Some would call this a con as we would fork out the high price we currently pay.

[DTCwordfan]

It takes away free market economics - it has been used extensively as a system in French ex-colonies (contrat de compensation ou mandataire de compensation) and what happens is the government puts the squeezes on the prices as it canbt afford to risk its electorate. Motivation for the local oil companies disappears as they have to cost cut and cost cut and eventually all professionalism disappears as well as the salesforce and then safety.

I know well about the system as I have had to pick up the pieces in a number
of these countries (for example Tunisia and Morocco) for one of the majors - the way we broke the mentality and got some air back into the cost structure was showing them that safety was being compromised and that it was potentially becoming an even bigger issue for the government - and in return for allowing the price to get closer to the market an action plan and milestones for getting safety fully restored (across the industry).

[DTCwordfan]

petrol demand is actually higher in the summer because of the extra mileage on tourism, especially in the States - and the impact or airconditioning means about an extra 10% call off of gasoline (petrol).

Diesel consumption for heating oil is lower it is true but there is a call off for the lighter grades (cleaned up kerosine) for the aviation industry. Most people think that planes fly around on rocket fuel and a re shocked when they hear it is cleaned up (dessicated) kero (i.e. water all taken out as that doesnt auger well at 35000ft). And of course, you have all those tourism planes in the air. So oil consumption (crude) is pretty high through to August......

[eastern]

When oil was $150 a barrel at the end of 2008 we paid less than we are paying now for a litre of fuel. If the price of oil was linked to the price of crude it would go back down as quickly as it rises. It would appear that the oil companies are the ones who are ripping us off, mind you one company does have a very large bill to settle in the States!!