$250 a barrel oil

Oil costs $61 dollars a barrel (Brent Crude).... However, in the UK, the government takes 80% of the sale price of petrol/diesel in tax. A tax rate of 400%. The effective price of oil is thus $250 dollars a barrel.

Peak Oil advocates believe that the world will lapse into chaos at that price - oh well, on to the next prophecy of doom.

There is a general agreement that we should move away from fossil fuel. Why do we use it? Well, fossil fuel is the cheapest fuel available. All the other options cost more. It isn't a conspiracy by Big Oil.

However the difference is much less than the tax on fuel. If we switch, the government is faced with a simple and very unpleasant choice. Either lose reveue or try and persuade people that fuel prices should be even higher. The Fuel Crisis tells us that the second option would be impossible.

The first option has a high political cost - people are used to the extortionate fuel taxes. Shifting the tax elsewhere would be very visible. 2p on income tax, anyone?

I suspect that part of the reason behind the road pricing scheme is to shift the tax take from the fuel to the vehicle. What Chancellor wants to be the one who puts a 400% tax on hydrogen & made motoring yet more expensive. A gradual ramp up of road pricing would be a neat way to keep their hands in your pockets.

The government is addicted to Oil. Not us, not even the Oil companies (who are merrily moving to the post Oil age).

This is pertinent in light of the plans of all the major parties to introduced environmental taxes. Taxes do not merely discourage behaviour - their purpose is always raising revenue. A tax on CO2 emissions will make the government dependent on CO2 being emitted....