Fuel up/down again

NorthstaNder said:
Phhh...Cyclist?
Click to expand...

No. Just a realist. I am aware of the cost to the country of low priced fuel. There is a cost to extract oil. And if that is too low, then there is no profit for the oil companies. No profit means no taxes. Means no wage increases, and possible redundancies. Means less money in the economy, means other, non oil jobs are at risk. Meaning the very real possibility of a bigger welfare bill to go along with the reduced tax intake.

Of course everyone likes saving £20 per tank when they fill up. But at what overall cost?

I just hope it rises again quickly enough to prevent a significant amount of job loses, and loss of taxes such that Osborne needs to raise fuel duty and we are all hooped when oil returns to a more normal price.
 
xs2man said:
No. Just a realist. I am aware of the cost to the country of low priced fuel. There is a cost to extract oil. And if that is too low, then there is no profit for the oil companies. No profit means no taxes. Means no wage increases, and possible redundancies. Means less money in the economy, means other, non oil jobs are at risk. Meaning the very real possibility of a bigger welfare bill to go along with the reduced tax intake.

Of course everyone likes saving £20 per tank when they fill up. But at what overall cost?
Click to expand...

We don't extract enough oil for lower prices to be a bigger drain on the economy than lower energy costs a boost on the economy.

Money not spent on energy costs is spent elsewhere - lower energy costs stimulate our economy, they do not hamper it.

Thats not to say there is no cost or negative aspect to sustained low price, but the benefits in the medium term outweigh the pro's significantly.

Remember, historically prices have almost always been lower than they are now. The boom years of the North Sea were against a backdrop of oil significantly cheaper even than now. North Sea oil is an industry in decline anyway.

$50 a barrel isn't even THAT low!
 
[TW]Fox;27446584 said:
We don't extract enough oil for lower prices to be a bigger drain on the economy than lower energy costs a boost on the economy.

Money not spent on energy costs is spent elsewhere - lower energy costs stimulate our economy, they do not hamper it.

Thats not to say there is no cost or negative aspect to sustained low price, but the benefits in the medium term outweigh the pro's significantly.

Remember, historically prices have almost always been lower than they are now. The boom years of the North Sea were against a backdrop of oil significantly cheaper even than now. North Sea oil is an industry in decline anyway.

$50 a barrel isn't even THAT low!
Click to expand...

Jono8 said:
?

We are not Libya mate.
Click to expand...

That's all easy to say when you live all the way down south. But up here, the local economy is heavily based on the oil industry. Not just the guys who work offshore (who happen to live all over the UK, not just NE Scotland), but all the onshore support, the engineering firms, couriers, transportation etc... It all adds up, and are all reliant, to different degrees admittedly, on North Sea Oil.

Sure, it is easy to say that the cost of oil has been a lot less up until fairly recently. When the whole North Sea oil boom was kicking off. However, it is a different world now. The easy oil is all but gone. More complex procedures and equipment are now needed to extract the oil that's left. There is a LOT more down time now due to increased health & safety procedures (obviously a good thing, but all the same, it adds cost to the uplift price). Everyone needs their pay rises etc...But that all eats into profits, and while £22Bn (the tax revenue from O&G company profits) might not be a huge amount in the overall economy, it is significant enough, coupled with job losses, it all adds up.

I suspect the average O&G worker who loses their job is probably paying something like £1,000 per month in taxes (probably more actually). So low or zero oil company taxes, plus these losses all add up to not nothing, far from it in fact.
 
Yeh but oil is a cost for every other industry. Lower oil prices increases profits and/or real wages for everything else.

With inflation at 1%, people are actually seeing real wages rise. The treasury will start seeing real tax take rise. Cost of public services will fall, welfare costs will fall (except of course the stupidly triple locked pensions).

Oil industry is still a smallpart of the UK economy. Some regions will be more reliant, but they still have a nice commodity industry to derive income from. The same can't be said for some towns and regions which have been suffering for the last 7 years.

Think of the crippling effect high oil prices has on the economy, and then suddenly undo it. If these low prices are sustained the UK economy may do very well in 2015.

The UK also imports more oil than it exports i.e. a net consumer of oil. So less money is spent padding other nations' pockets.
 
Last edited:
Overlag said:
I can't believe someone is saying oil needs to cost more... Cheaper is better in every way.
Click to expand...

In a lot of ways yes but not quite everyway, the FTSE 100 is quite heavily commodity/oil based so low oil prices hit oil company shares which then affect the FTSE 100 and investor confidence. Also there's a lot of pensions invested in companies like BP.

Obviously there are significant other benefits to low oil prices which have been mentioned previously in this thread, but there will always be winners and losers.
 
Last edited:
Think swapping from a 1.9 Diesel to a 2.5 Turbo is working out pretty well with these price drops.

Petrol at 85p a litre here at the moment, think Diesel is around 79p/l.
 
xs2man said:
Unless you work in the oil industry?
Click to expand...

So just so the oil industry doesn't benefit, no one does? Cheaper oil is better for everyone except the huge oil companies. Cheaper fuel for haulage companies passes on down the line for everyone for instance, not only do they make more profit so can invest more (jobs!), but generally the prices will go down for what they are delivering, ie supermarket goods going down and/or more jobs too.

The global slowdown may be the banks fault but it certainly weren't helped by the petrol prices doubling. Haulage firms went under, transport costs goes up, people can't afford to travel, everything goes bad... But I guess if you work in the oil industry it must be hell making a few million less when they make billions.

And anyway since we import so much oil, cheaper is better for *everyone* in the UK. If we exported then it would be bad for us.
 
Last edited:
Saying that it is good for everyone is obviously completely untrue - there are a lot of people with financial interests in oil exploration in this country.

On a personal level though, i am loving it as i consume a fair quantity of fuel for a private individual. The BP station on the way to the office is down to 106.9 which equates to around 96ppl if paying by Amex (Hi Joe).
 
If oil halves an oil company doesn't lose a few million off billions.

Cheap oil is also bad for the alternative energy options as it becomes much more expensive (relatively)
 
Overlag said:
So just so the oil industry doesn't benefit, no one does? Cheaper oil is better for everyone except the huge oil companies. Cheaper fuel for haulage companies passes on down the line for everyone for instance, not only do they make more profit so can invest more (jobs!), but generally the prices will go down for what they are delivering, ie supermarket goods going down and/or more jobs too.

The global slowdown may be the banks fault but it certainly weren't helped by the petrol prices doubling. Haulage firms went under, transport costs goes up, people can't afford to travel, everything goes bad... But I guess if you work in the oil industry it must be hell making a few million less when they make billions.

And anyway since we import so much oil, cheaper is better for *everyone* in the UK. If we exported then it would be bad for us.
Click to expand...

Its not just the big oil companies, a lot of engineering firms are heavily invested in the manufacturing of products and parts, valves, pipelines, exploration etc. To say its better for everyone is complete hogwash. Cheaper, yes, all well and good, but cheaper to the detriment of everyone who works in the industry and associated industry (you would be amazed at how many!) is not a good thing at all.
 
You must log in or register to reply here.
Back
Top Bottom