Sunday, June 15, 2008

History of petrol prices

I've been looking into how the real terms cost of petrol has changed over time. The figures in the extract below come from EK Williams, accountants and business advisors. They make interesting reading: £1.85/litre in 1916; £1.16/litre in 1957; £1.02/litre in both 1973 and 1979, (figures indexed to 2007's £...). Comments on the figures and EK Williams view/interpretation most welcome. These things spring out of their comments for me: fuel prices could go even higher; we've been desperate for affordable, high quality public transport for many decades, for transporting people and goods (not news for many people I know!); its vital to our future stability and security of life that we localise our development, supporting local jobs and services in local economies, to minimise the transport costs involved in supplying food and other essentials...

'To take one [admittedly extreme] date: indexed to 2007’s value of the £ sterling, in 1916 a gallon of petrol in the UK cost approximately £8.40 which works out at around £1.85 a litre, and that was before governments had really discovered how much duty and tax they could start putting on the stuff. If that’s too far back, take 1957; ‘only’ fifty years ago, just after the Suez crisis, the UK gallon retailed for £5.26 in today’s money – that’s £1.16 a litre. If that’s still too far back, let’s take a “Life on Mars” trip back to late 1973, around the time of the first modern ‘oil crisis’ following the 1973 Arab-Israeli war; at that point the UK gallon was selling at £4.65 in today’s money, which is equivalent to £1.02 per litre, with a similar figure in 1979 around the time of the US/Iranian Hostage Crisis.'

'Enough history. The fact that today’s fuel prices aren’t uniquely high in real terms doesn’t mean that they won’t bring their own problems. Firstly there’s the general economic impact of fuel pricing; transport costs are an unavoidable necessity for most people, not optional spending. Hence when transport costs go up, and before disposable income has had a chance to follow [i.e. wage inflation..] something has to give. Usually that’ll be retail sales. Some of the big High Street names had already announced their ‘Pre-Christmas Sales’ season in mid-November. A further impact of fuel pricing is due to the fact that virtually all of the goods we buy and sell are transported by road [not that rail or air transport will be immune to oil price rises anyway] and so the cost will go up. Look at that again: customers with less money to spend, suppliers with rising costs; there’s a squeeze somewhere in the middle there – looks like it’s the wholesaler and retailer who’ll be taking the pressure from both directions.'


  1. Your costings and analysis make very interesting and enlightening reading, but there is an important point missed. The pre-tax price for our fuel is among the cheapest in the EU, but after tax it is amongst the most expensive. The tax charged is creating a sharp discontinuity in the economics of transport costs between us and the rest of the EU. This will not lead to more fuel efficient transport, it will lead to foreign companies jumping into the gap with cheaper drivers and huge fuel tanks coming here to pick up the trade. This will take the tax take out of our economy and lead to the government raising taxes elsewhere to compensate. Back where we were except for a loss of UK jobs and a loss of control over the trucks on our roads. The tax on fuel is pure greenwash in the very worst way. Moreover it could even be described as moral blackmail.

  2. I'd just like to point out that the costings are not mine - they are the accountants I quoted and gave a link to. I made brief comments on the figures at the beginning of the posting. The block of text in italics and quotes comes from the accountants website.

    My view is that we need to radically review the tax system and make sure it is put onto a rational, consistent basis. Green taxation must be genuine, not the poor excuse for it we now have (and we need to spend the income from taxation to make society greener). There should be inter-governmental cooperation at EU level on this issue too.

    We must wean ourselves off oil dependence and provide affordable, high quality, efficient, sustainable modes of transport for goods and people as well as boosting support for the local economy to cut transport dependence. Government has talked the green talk but not walked the green walk!

  3. Fuel prices are rising all around the globe. Where fuel taxes are low and where they are higher. Since oil, being finite, grows more and more scarce its price and thus the price of fuel will rise accordingly. There is massive demand for oil and its products, which boosts the price even more. If we stay oil dependent then most of what we buy will also become more and more expensive. Thus its vital to the security, stability and affordability of our lives that we fight our oil addiction by building a green economy and society. Why is the government so very timid and lacking in leadership on this?


Genuine, open, reasonable debate is most welcome. Comments that meet this test will always be published.