Leading article: Encourage the end of our reliance on fossil fuels

Click to follow
The Independent Online

They're back. As in the autumn of 2000, a motley collection of farmers, hauliers and aggrieved motorists is threatening to bring chaos to Britain's roads and forecourts. As ever, they believe they have a simple and just case. They claim that the soaring price of petrol is destroying their livelihoods, and point out that half of the price of every litre of fuel sold goes to the Treasury in tax. The only solution, in their eyes, is for the Chancellor, Gordon Brown, to cut the fuel duty.

Unfortunately these protesters are labouring under a delusion. Unlike in 2000, the rising price of fuel has nothing to do with the Chancellor. The duty on fuel has been frozen since October 2003. Tax actually constitutes a smaller percentage of the retail price of petrol than it did five years ago. Mr Brown is taking proportionately less - not more - from the motorist's pocket.

The steep rise in fuel prices is a result of events outside Britain. Rapid economic growth in China and India is increasing the demand for crude oil. The US remains as voracious a consumer of energy as ever. Instability in the Middle East has pushed up prices. And last month, Hurricane Katrina knocked out 10 per cent of US refining capacity. All this - not the greed of the Chancellor - is the reason petrol prices have edged above £1 a litre for the first time. The idea, peddled by the protesters, that the Chancellor can wave a wand and create lower motoring costs for ever is risible. The price would probably come down in the short-term, but fuel prices will always ultimately depend on the global availability of crude oil.

What these protesters are in effect demanding is a subsidy. Yet such subsidies already exist. Only half of the fuel sold in the UK pays duty at the full rate, thanks to a range of discounts and exemptions. Many of the farmers threatening to participate in motorway "go-slows" today run their vehicles on duty-free diesel.

None of this is to argue that high oil and other energy prices do not have serious implications for the British economy. They clearly do. Electricity prices have begun to rise and inflation is creeping up. Many small businesses will need to look for more efficient ways to transport their wares. It will be tough for many. But these firms will need to do this anyway if they are to survive in the long term. Oil is a finite resource and global demand looks set to remain high for some time.

So far the Chancellor's response to these protests has been disappointing. He has rightly refused to reduce fuel tax - but yesterday he appeared to blame the present situation on the oil-producing nations of Opec, accusing them of not pumping out enough barrels. He implied that this is what is needed for the crisis to subside. Yet at the root of the problem is the world's dependence on this one diminishing resource.

The Chancellor has an opportunity. Treasury receipts are increasing as a result of the higher fuel prices. And the Government is receiving substantial revenues from North Sea oil. This money should not go on balancing the Chancellor's increasingly precarious books, but on promoting a more environmentally sustainable British economy. There ought to be a massive increase in the number of cycle lanes and greater subsidies for the development of green technologies and alternative fuels. Those who drive low-emission hybrid cars should benefit from more generous tax breaks. A carbon tax should be considered.

Yesterday the Chancellor called for a new World Bank fund to help developing countries invest in alternative sources of energy. But there is more that Britain should be doing on its own. Now is the time to push for a transition to a post-fossil fuel global economy. Britain should be at the forefront of this move.