PowerSwitch

Because our transport fuel is heavily taxed, the oil price rises will affect our transport costs at a smaller percentage than those of other countries.

As the world runs down the cheap oil supplies will we see a situation developing where the percentage change in 'transport fuel costs' has a greater effect on other countries, with the UK suffering at a lesser rate?

For example when the US 'gas' prices double and they reach $5, our transport fuel prices will have reached, what? ?1.25p as opposed to the current 90p (assuming a 75% tax level, is that correct?).

I'm just musing that (all things being equal which of course they will not). Demand destruction (recession) could hit a lot harder and earlier in other countries which do not have the tax buffer, and so we will still be motoring around whilst all those American SUV?s gather dust in the ?good ol USA?.

I have also been wondering how the high road fuel tax level will come into play. As I understand it, the road fuel duty is imposed on oil companies rather than directly on the motorist. The oil companies pass it on to the motorist at the pump. If the oil companies continue to show high profits as a result of high oil prices, (like Shell's record profits reported today) will the Chancellor be able to gradually remove the tax as well, to keep motorists sweet, or will he be accused of reducing tax on companies that are making higher and higher profits? He has to keep on taxing someone for fuel at a high level, surely - it represents 20% of treasury revenues. Or will another part of our life be taxed more to enable him to slash tax on road fuel?

Or perhaps, as you say, Ballard, because of our high tax levels already, price rises won't seem as bad as elsewhere, and will cause less agro and suffering.