Wednesday, 28 May 2008

Fuelling Protest

Yesterday’s fuel protests by truckers brought to the forefront some key dichotomies in public attitudes, and drew out some interesting political responses as well. The situation raises a number of different issues at the same time.

Firstly, we all know that, whilst the world is not about to run out of oil (despite some of the more alarmist projections) neither is the supply unlimited. Demand is increasing as countries like China and India industrialise, and the cost of extraction is increasing as the most easily accessible supplies dry up. The result is economically inevitable – over a period, prices will rise. Current price levels may well be higher than they need to be, due to a combination of speculative markets, political instability in supplier countries, and supplier cartels; but the underlying trend is upwards.

Secondly, the more globalised and centralised the economy becomes, the more goods will be transported. (Supermarkets have fewer and larger distribution centres, for example, so the same goods are often transported from their source to the centre, and then out to the shops – often passing each other in opposite directions on the same stretch of motorway in the process.)

Thirdly, because road transport (measured by the direct cost to users, rather than the total cost to the community/ environment) is felt to be cheaper or more convenient than sea or rail, the road haulage industry has boomed. Businesses were established or expanded on the basis of entrepreneurial decisions by individuals, given their assessment of the costs and risks at the time.

Fourthly, because the industry has boomed so much, it now has more suppliers competing with each other than is economically viable. It’s a buyers’ market – if one haulier increases his prices to pass on increased costs, another will undercut him. This is economically suicidal for the businesses concerned in the medium to long term, but it keeps their trucks on the road in the short term. It is not, however, the government's problem in the first instance.

Fifthly, we all tell politicians that we care about the environment, and want to do more to protect it – until it starts to hurt. Then, we want someone else to pay the ‘green taxes’. Politicians know this, so while they say the right words about protecting the environment, they’re terrified to take serious action, since it would lose them elections.

Now, it’s not that I have no sympathy at all for the hauliers. Many of them are facing difficult decisions and potentially real hardship. But subsidising them, in the way they are demanding, to continue to operate in a way which is sustainable neither economically nor environmentally is surely not the right way forward. Businesses have, or should have, no automatic right to government assistance to enable them to continue to operate if their continued operation is wrong both economically and environmentally. (Am I alone in finding the Conservatives' support for the protests a little strange in this context?)

Rail transport already looks uneconomic as compared to road, despite its environmental benefits. If increasing oil prices force a re-evaluation of this, surely that’s a good thing rather then something to be avoided by subsidising hauliers? We also make far too little use of shipping as a means of bulk transportation around our coastline.

Their point about unfair foreign competition is the one strong point in their favour; but subsidising native businesses to bring their costs down is not the only way of addressing that issue. Playing fields can be levelled by adding to one side, not just by taking away from the other.
If public money is to be used to help them (and whatever anyone says, targeting tax cuts to help specific businesses is a way of funnelling public money into them), it is surely better that that money should be used to help move the transport industry as a whole onto a more sustainable basis instead.


Draig said...

My understanding is that the hauliers were demanding a reduction in fuel duty (or at least no increase in September). Seems to me the Tories support for them is very consistent...Small (and not so small) haulage firms. Tax cuts. An opportunity to bash the government. The Tories know they're onto a winner here.

As to oil supplies. The issue isn't when Oil supplies run out. That's not our problem. It's when oil reaches the point of max. production globally ("Peak Oil" as it's called). There are geological limits on the oil SUPPLY and we're pretty much bumping up against them...oil prices are only going to go up and up, taking petrol ad gas prices with them.

Ceredig said...


But of course, the Tories are also against bailing out lame ducks, and in favour of protecting the environment as well, or have I missed something?

I agree with you on oil prices; they only have one way to go over the long term, even if the current peaks turn out to be a blip.

I'm yet to be entirely convinced about the question of 'peak oil'. The theory is good, but it's only really going to be a problem if we hit that point with demand still increasing and no realistic plans for a post-oil economy. That is, of course, the likeliest outcome, but I don't believe that it is inevitable - yet.

Draig said...

As to the peak oil problem, demand is still increasing, and, as far as I can see, there are no realistic plans for a post-oil economy. Can you tell me what they are? The government is in hock to the road and the oil lobby, as many of us well know.

The problem really is that our entire infrastructure is built around oil and it'll take at least 10 years to rebuild it around another energy source. And as to us here in the UK, our oil production peaked in 1999 and is now just over half of what it was back then. It's declining rapidly.

So quibbling over fuel duty doesn't solve our basic problem!

Ceredig said...


No, I see no plans for a post-oil economy either, and I agree that we're running out of time to prepare them.

WAG's route map is nothing more than a wish list and a set of good intentions; their actions show that we are as committed to oil as ever.

I agree that quibbling over fuel duty is almost a side show. What it does reveal, however, is that faced with taking hard decisions which will hit the electors in the pocket, none of our politicians seems likely to do what needs to be done.