Price at the Pump

The Chancellor this morning followed up comments by the secretary to the Treasury, Danny Alexander, on fuel prices by saying in an interview that “Our message is very clear -- the oil price has fallen and we expect that to be passed on at petrol stations as people fill up their cars,” Osborne says. “We will be watching very closely to make sure they do.”

Suddenly, Tesco, (who no doubt have been in receipt of a telephone call either from the Treasury or their PR bunnies), have this morning reduced prices by 1p a litre. It's a start.

Don't though expect much of a reduction, regardless of what politicians say in interviews. You see, they simply can't afford it. They are in fact complicit in draining your bank accounts and wasting billions of tax payers money in ploughing money into renewable energy projects, and raising more taxes in the process in a sector that is falling rapidly into administration. It's in the interest of self interested government officials and civil servants to allow oil companies to cover up the disparity between the 31% drop in oil and only modest falls in heating oil and fuel. A 30% drop in end user fuel prices would drive the renewable program into buffers at high speed.. Either way high fuel prices are here to stay, either from profiteering by energy companies or the governments who will raise the tax duty to maintain their white elephant vanity projects.

The sad thing about this is of course that we have a fleeting opportunity to give respite to the hard pressed consumer as we head into winter and toward Christmas and simultaneously give the economy an adrenalin shot; not through the central banking Keynesian madness of printing but through markets finding their natural level.

We'll miss the target again though. Just enough will be done to quieten down the headline writers and local constituency chairmen and we can then add it to the list of missed opportunities to boost the economy from the bottom up..