Queues at petrol stations have started to appear. Hauliers are planning to blockade supplies, to stop Dover operating and to create a go-slow on the M4. The cost of a petrol is rising towards a £1 and we are thinking twice about whether we should make longer journeys because the cost of the petrol is beginning to hurt.
It may sound familiar. Is this going to be the petrol crisis of 2000 all over again?
At first blush, a great deal is different. Everyone accepts that the main driver for the soaring price of petrol this time is the rise in the international oil price, which has practically doubled compared to a year ago.
That is a change from five years ago when Gordon Brown got the lion's share of the blame because he was deliberatedly ratcheting up the tax on petrol each year. Since that is not the case now, support for proposed blockades appears to be weaker now. It also means that the hauliers they may not manage to cause such great disruption.
But people are losing money - not just hauliers but nurses on modest salaries driving to work in country hospitals and the self-employed travelling around as part of their business. It would be provoking to us all if the Chancellor just carries on complacently as though all this were nothing to do with him. Though he does not want us to realise it, he is caught at the centre of this problem.
He should remember that even in 2000, support for the disruption of supplies was not that fulsome. Only 56 per cent of people were behind further blockades according to one poll. But although people were not sure about the hauliers, they became convinced that the government was handling it badly. Disapproval of the leadership ran at the higher level of 72 per cent.
So while support for the hauliers may be more muted than before, anger with the government could still increase. It is a simple phenomenon: if anything goes badly wrong with the smooth running of the country, the government tends to lose popularity.
Anger with the government is likely to increase both because of the disruption and because we don't like paying so much for our petrol, especially as it comes just before we are going to have to pay for heating and lighting this winter. British Gas has already announced a price rise of 14 per cent.
The focus of annoyance is going to keep coming back to Mr Brown because he refuses to do anything to ease the pain. Worst of all, he is actually making money out of it.
The amount of revenue the government collected from North Sea Oil production last year was £5billion. This year, according to the UK Offshore Operators' Association, he is on course to take far more: £10billion. Even that estimate might be too low since it is based on an average price of of US$50 a gallon of crude oil. The price is currently much higher.
He is also making extra money out of VAT on every litre of petrol we buy at the pump. True, the amount he gets in petrol duty has not changed. It is a whopping 47.1p and that is what make the price of petrol in Britain among the highest in the world. But there is also VAT on petrol which has risen from 12.2p a year ago to 14.1p today. So 2p of the cost of each litre now is extra money which Gordon Brown is taking from compared to a year ago. If you fill up a tank with 45 litres, the extra money taken by Mr Brown is 90p. He is making a painfully high oil price even higher.
As more people realise this, they are going to demand that Mr Brown cuts back on his increased taxation of petrol - even if it is relatively short term. After all, the current sky-high oil price is not likely to last more than a year or two. At this price, all sorts of energy reserves around the world that were not worth exploiting before have become highly profitable. There is about to be a boom - especially in America and parts of the former Soviet Union - in oil, coal and gas development.
But Gordon Brown has another problem. One of the other differences between now and five years ago is that, in 2000, the economy was going pretty well and the government's finances were in good fettle. But he has used up both the good economic inheritance he got from the Tories and the sound financial position he gained from economic growth combined with tax increases. Mr Brown is therefore heading for increasing budget deficits and lower growth. He has not got so much room for manoeuvre. In his next budget, he was expected to raise taxes. He really needs the extra tax windfall that this higher oil price is bringing him.
He knows he is in trouble. That is why he tried to pre-empt discussion by saying he was not going to reduce the tax. He also has briefed newspapers that this is all an international problem and nothing to do with him. He has tried to re-direct attention away from himself by blaming the Organisation of Petroleum Exporting Countries for not increasing production more. While he is at it, he is also trying to make us believe that the recent oil price rise is as economically devastating as the one in the 1970s. That is simply not true and he is saying it - being one of the most calculating of politicians - because he wants this to be accepted as the reason why the economy is doing worse now than he predicted.
In the world Brown wants us to believe in, everything that goes right is because of him and everything that goes wrong is because of someone else.
But the hard truth is Mr Brown's record of economic growth is coming to an end and he is now just a tax-and-spend chancellor making money out of other people's petrol misery. He had better bend with the wind if he does not want the frustations and unhappiness of the moment to turn soon into bitterness directed at him.
(This is the unedited version of an article that appeared in the Daily Express today.)
Posted by James Bartholomew • Indexed in Politics • Tax and growth
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