Friday, 12 March 2010

New UK Petrol Spike Just Getting Started

If any further evidence of the pain being caused by the inexorable slide in the value of the pound, and the subsequent inflation an import-addicted economy is suffering, were needed, the latest reports about rocketing petrol prices provide it.

The Independent, for instance, tells us that pump prices have risen by well over a fifth in the past 12 months, although it omits to mention that they were pretty stable for most of that period. It's been the last three months or so that have seen the bulk of the spike - so far. And there is far worse to come. If you drew a graph of petrol price rises over the past 12 months, the line would roughly trace a parabola. My own local Texaco has pushed its prices up five times in the last five weeks alone - to an eye-watering 117ppl, and perilously close to the record of 119ppl, which happened when oil prices had ballooned to $147/barrel, just before the crash.

Today, as of 5.38pm GMT, the NIMEX crude oil price stands at around $81 a barrel and falling (itself an inflated price caused by artificially created conditions of scarcity by OPEC output cuts) as bad consumer spending data in the US causes further jitters on their markets. That's a full $66 a barrel less than the previous spike - or 44%. Even taking into account Darling's many tax rises that have since boosted that price (by about 7ppl since 2009), your pound is worth at least 35% less than it was before the crash came. The economic damage this is causing is unknown as yet, but it will be serious. Indeed, the Chancellor's plan to slap another inflation+1p hike on the price in the budget is, quite simply, economically suicidal.

The whole mess smacks of chaos, incompetence and desperation at the heart of a government hell-bent on pursuing a scorched earth economic policy, where they continue to mask the real horror of the current state of the British economy by creating yet more debt in an attempt to delay reality till after the election. But it's a spiral, with increased debt leading to further currency devaluations, followed by higher inflation, higher prices, especially on imports (like oil) - all paid for by us out of salaries that remain stubbornly flat - and then all that's followed by even higher (stealthy) taxes, and the cycle is complete.

I just hope people remember whose ineptitude is responsible for this renewed impoverishment (Brown et al) - and punish them accordingly, ie: severely. Otherwise, as I've said before, what comes next will make March 2010 seem like the good old days. At this rate, for instance, the two-pound litre will be with us just in time for the General Election and whoever wins will send a signal to the markets, who will then determine in which direction prices will move after that. If it's Labour, then the only way is up - for the petrol price, of course, but also for debt, the acceleration of devaluation, inflation, tax and pain.

For Britain, the only way would be down. Down and out.


  1. It's already at 118.9p at my local texaco. Feels like I'm funding Darling's deficit reduction on my own. Still, BMW V8 goodness will out!

  2. Jesus H. Christ, UB. It's worse than even I thought....!

    My old Mondeo (ehem, yes I know - but it's the most reliable motor I've ever had) isn't that thirsty - when I don't thrash the tits off it at any rate - but even it's costing me a bundle to get to work these days - and I only commute about 30 miles a day.

    But it must melt your debit card when you feed that beast of yours.

    I'm still jealous, though :)

  3. It's a good thing I'm on good comission, my mpg is an eye-watering 16 miles per gallon at the moment. I've really tested this global warming theory to destruction the last 3 months...the result???

    The coldest winter in decades. Go figure.

    Oh and melting my debit card is right. Near £90 a tank!

  4. Yeah: Almost everything is imported and its getting dearer and derar as the pound becomes worthless against the Vietnamese dong.

    It's strange then, isn't it, that the inflation figure is so very very low.

    Still, that's how they fix... ooops, did I say fix, silly me... I, of course, meant 'settle' ... yes that's how they settle the pensioners' increases....

    Best keep it at virtually deflation till the election anyway. I reckon its about 9 or 10% in reality. Not that reality was ever likely to bother the likes of the British politician.

  5. 35% real terms spike (so far) in fuel prices filters through to the rest of a road-based distribution network usually within a matter of weeks. Your wise suspicion of an imminent 10% general price hike, tris, therefore represents a conservative estimate rather than an extreme view.

    In short, my friend, we are currently sleepwalking into a price shock, the consequences of which will be very real. In other words, the imminent, severe UK PPP downgrade will have fuck all to do with our broken politics - and our useless politicians - of any kind. They just do not give a shit, and absolutely wouldn't 'get it' anyway - even if they did.

    In other words, tris, you're completely correct on all counts.


Any thoughts?