With the government taking most of the blame (38% of those polled placed the blame on Whitehall), it seems that few people acknowledge the fact that increasing consumption of a finite resource sold on a volatile world market is the real reason for high prices at the pump.

Of course, taxation makes up a significant percentage of the retail price of fuel, which is something that governments do have influence over. To this effect, Conservative party leader David Cameron has proposed a sliding scale for value added fuel tax which decreases as crude oil prices increase, shielding the consumer from global oil market shocks.

However, taxation is ultimately irrelevant to the long term future of oil prices, as prices will inevitably rise as demand in an increasingly affluent world continues to outstrip increase in supply. It is in this respect that Western governments need to face up to the necessity of implementing long term policies to reduce and eventually eliminate the world economy’s dependence on oil.

Solutions for the future?

Reducing, or indeed increasing fuel taxes won’t achieve this, and neither will drilling for more oil or encouraging people to dive fewer miles in more efficient cars.

The only real solution is the development of technology that can offer similar practicality to fossil fuels and provide this to billions of consumers at a low price (in many places a pint of oil still costs less than a pint of beer), and this technology will only be developed and become viable as oil prices increase, letting the market do its work by reducing the comparable cost and risk of new investments.

Perhaps, therefore, the best thing that governments can do in this case is to leave the issue alone – governments have a poor track record in successful market intervention, with many current drilling and tax reduction proposals likely to only prolong the pain and increase damage to the environment.

The British are right to blame their government, although maybe we should blame them for doing too much, rather than too little?

Other posts about oil prices:

• “McCain Credits Bush for Drop in Crude Oil Prices, White House Basically Replies: ‘Wasn’t us.’
• “Bush Administration Proposes ‘Fire Sale’ of Rocky Mtns. For Oil Shale Development”
• “New McCain TV Ad Blames Obama for High Gas Prices”

Photo Credit: j-cournelius via flickr Under a Creative Commons License

Protests in Europe have been widespread, as Europeans who already pay twice that of our US cousins for fuel begin to feel the financial consequences of consistent price increases.

Truck drivers in Spain and France have blockaded major roadways and paralysed traffic on major city arteries. Meanwhile in the UK, similar protests by truck drivers - who claim they are rapidly being forced out of business by high fuel prices - have taken place across the country.

Adding to the chaos, Shell tanker drivers chose the same weekend to strike over pay disputes, causing many petrol (gas) stations to run out of fuel. Government calls to avoid panic buying have predictably caused a peak-oil dress rehearsal, with long queues forming on many petrol station forecourts.

Read more of this story »