Apr 22, 2016
The diesel emissions scandal has rumbled on since the Volkswagen revelations emerged last year, but until recently not that many new details have hit the mainstream news.
That’s all changed this week with the publication of the results of a UK enquiry into diesel vehicles. The results of the enquiry are eye-opening – to say the least.
According to a report in The Guardian, the general findings of the government study point to diesel vehicles routinely emitting far more pollution in real-world tests than they do in a laboratory setting. Some of the diesel emissions revealed in the test exceed EU safety standards by as much as 12 times.
37 different diesel cars were tested in the government study. “Not a single car” managed to meet current EU standards, with average diesel emissions five times higher than target limits.
Diesel Emissions and Volkswagen
The information above may lead you to question whether other car manufacturers have been involved in the kind of practices uncovered at Volkswagen last year. In fact, that’s not the case. The Department for Transport has stated that no devices intended to trick the tests were found in any other cars, and that “there have been no laws broken.”
Junior Transport Minister Robert Goodwill has stated that he’s disappointed that “the cars that we are driving on our roads are not as clean as we thought they might be.” Environmentalists will no doubt see this as something of an understatement.
It’s hard to see quite how the motor industry (and government) is going to move forward from here in any practical way. According to targets, by 2020 all diesels sold will have to comply with an 80mg/km diesel emissions limit. That’s all very well, but does little to address the countless diesel vehicles already on the roads pushing out far more pollution that anyone thought.
Meanwhile, on the other side of the Atlantic, Volkswagen has reached a settlement deal in a court in California to make amends for their part in the diesel emissions scandal. Full details have yet to emerge, but it’s thought VW will have to pay out Billions in compensation, and offer to buy back nearly half a million vehicles.
Apr 5, 2016
Car tax (or Vehicle Excise Duty, to give it its technical term) is changing dramatically from April 2017. As with any government budgetary tweak, there will be winners and losers when the changes are made. Now, a detailed study from Parkers has revealed who those winners and losers will be – with some surprising conclusions.
Car Tax Changes: The Background
Back in 1999, the government began to make changes to the car tax system so that people driving less polluting cars wouldn’t pay so much Vehicle Excise Duty.
To begin with there was a discount for cars below 1100cc, then in 2005, a new system was introduced with various price bandings based on emissions.
Zooming back to the present day, cars are generally far less polluting than they were. The Chancellor worked out that by next year, around 75% of new cars would be exempt from car tax. Unsurprisingly, this resulted in a revamp of the Vehicle Excise Duty system – one that according to the Parkers’ report will earn the government over £5 Billion in extra revenue by 2023.
Car Tax Changes: The New System
The new car tax system is much simpler than the current regime. There will be two Vehicle Excise Duty rates, and while one is still a zero (free) rate, it will only apply to cars with no emissions whatsoever (i.e. hydrogen or electric cars). The other standard rate, for all other vehicles, will be £140 per year.
Then come the complicated bits; Every car has a “first year rate” for when it is initially taxed. This can range from zero for electric cars, to £2000 for gas guzzlers with emissions of over 255 g/km. In addition, cars purchased for over £40,000 will attract an additional tax liability of £310 per year for years two to six of the car’s “life” – a total of £1550 per premium vehicle, regardless of how “green” it is.
The Parkers’ study suggests that many drivers of polluting vehicles will actually end up better off under the new system than before. Despite the hefty “year one” tax costs, over the course of six years owners of these cars will see their total car tax liability drop due to a big reduction in the standard rate compared to now.
The most significant conclusion from the report is the fact that over 90% of the extra tax that will be raised will come from drivers of cars with emission figures lower than 130g/km – which it’s fair to say does seem a little unjust.
You’ll find more details of the Parkers’ study here. It’s important to note that these car tax changes only apply to new cars. Existing vehicles will continue to be taxed under the “old” regime.
Mar 31, 2016
New fuel price signs were switched on along the M5 motorway this week, as part of a new government trial to improve petrol price transparency.
Users of the motorway can now use the roadside displays to see the price of fuel at five service stations, without having to leave the motorway. Andrew Jones, the Road Minister, hopes that this will “make it easier (for motorists) to plan their breaks around the cheapest deals.”
The service stations taking part in the scheme are located in Gordano, Sedgemoor Bridgwater, Taunton Deane and Exeter.
Fuel Price Signs – The History
This trial of fuel price signs is a government initiative being funded by The Treasury. It’s being implemented by Highways England on the government’s behalf.
The idea of trialling fuel price signs came up following an OFT study on petrol and diesel prices in 2013. One of the main reasons for the study was to investigate the realities behind the widely-believed “rocket and feather” theory (where fuel prices “rise like a rocket and fall like a feather” in response to oil price changes).
Despite some disappointment from drivers and motoring groups, the OFT study concluded that the fuel market was sufficiently competitive. However, one detail the survey did acknowledge was the heavy disparity between prices within towns, and those at motorway service areas.
It’s undeniable that certain factors can lead to fuel being more expensive at motorway services, including staffing costs and other expenses relating to 24/7 opening. However, fuel at services is often so much more expensive than elsewhere that it’s hard not to assume that these establishments are capitalising on their “captive audience.” That’s certainly the perception of plenty of motorists.
The idea of motorway fuel price signs is to erode this “captive audience” perception, by allowing drivers to make a buying decision before actually leaving the motorway. Hopefully, the eventual outcome of this will also be cheaper and more competitive prices at these service stations.
Fuel Price Signs – The Details
I was pleased to be able to have a discussion with Antony Atkins from Highways England and find out more detail about the new trial scheme. As mentioned above, Highways England are managing this scheme on behalf of the government.
Initially, the trial will last for 18 months. It will then be for the government to decide whether to extend it across the nation’s motorway network. Its success will be measured on four key criteria:
- Whether safety is maintained for road users and road workers alike.
- Whether customers (road users) find the system useful.
- Whether increased transparency results in more competition between the participating stations.
- How well the technology works, particularly with regard to keeping the signs updated in real-time.
The M5 is a key tourist route, taking millions of people to Devon and Cornwall. Highways England hope that the fuel price signs will provide a useful service for these people, many of whom are unfamiliar with the areas they are passing through. These drivers are therefore less likely to want to leave the motorway to source fuel elsewhere.
This led on to a question we were keen to find out the answer to – whether the scheme could be extended to point people away from the motorway to cheaper “off network” garages. This isn’t within the scope of the trial, as this initiative is about increasing price transparency specifically for motorway services – off the back of the OFT report referred to earlier.
Will the Fuel Price Signs Work for Customers?
Taking a slightly cynical view, it seems probable that there are two likely outcomes following the launch of these signs:
- Their existence will really stimulate competition, resulting in a price war between the garages which will be great news for motorists.
- The garages will align their prices so closely that benefits to the motorist will be eroded.
Putting that cynicism aside, we do actually have some evidence that goes beyond supposition, because fuel price signs are already in place in some other European countries, including Italy and Portugal. According to a detailed Bocconi University study, the signs in Italy have pushed prices down to the tune of €0.01 per litre. The corresponding effect on the M5 will be revealed in time, but the 18-month trial period should give the new system plenty of time to settle.
Obviously at PetrolPrices.com, we welcome any move that will improve fuel price transparency. It is a shame that this initiative doesn’t also take into account forecourts away from the motorway, but it’s fair to say the other countries’ schemes don’t do this either. Fortunately, you have our free service to bridge that gap!
Mar 16, 2016
Fuel duty has been unexpectedly frozen in today’s UK budget, for the sixth consecutive year.
It’s pleasing and refreshing to be proven wrong on this issue. As recently as this Monday we reported that a two pence per litre increase in fuel duty seemed highly likely as part of this budget – a view shared across the national press. However, Chancellor George Osborne announced today that the longstanding freeze will remain.
Cynics will no doubt seize on the undeniable fact that our fuel duty is still the highest in Europe. However, against the backdrop of this surprisingly positive news, it’s perhaps best to focus on the fact that, for once, a widely-anticipated tax increase has not come to pass.
The savings involved aren’t insignificant either; two pence per litre more adds £1.20 to every fill-up of an average 60-litre tank, so over the course of a year this makes quite a difference.
Supermarkets and the Fuel Duty Freeze
Today’s announcement may leave some of the supermarket chains rather red-faced. As reported in The Express today, Tesco already started to lift prices beyond 99 pence per litre levels “amid fears” of the widely-expected duty increase. One now wonders if they may fall back again in view of the continued tax freeze.
However, fuel duty isn’t the only factor contributing to pump prices. The cost of crude oil is now beginning to rise, albeit still at a decidedly tentative rate. This will contribute to wholesale fuel price increases, and unfortunately for the consumer, this means there remains a reason for costs at the pumps to creep up.
Insurance Premium Tax
Unfortunately, there was some negative news for motorists in the budget. The standard rate of insurance premium tax is increasing by 0.5%, according to a report in The Telegraph. This is likely to cause some upward pressure on car insurance costs, which according to the report have already risen by an average of 13% over the past year.
However, even this news isn’t as bad as it might have been, with some pundits had expected to see a far more significant 3% increase.
The budget obviously isn’t just about motoring. As is the case every time, different demographics will be affected by the various cuts, increases and changes in different ways. That said, we really didn’t expect to be reporting on a fuel duty freeze today – so that’s the good news we will remain focused on.
IMAGE CREDIT: Pixabay
Feb 24, 2016
Petrol prices probably aren’t the first thing that spring to mind when you consider your vote on the forthcoming “in/out” referendum on Britain’s membership of the EU.
However, as I briefly mentioned in a previous article, some experts are making some rather grim predictions regarding what could happen in the event of an “out” vote.
These predictions are generally related to an anticipated fall in the value of Sterling. As oil is traded in Dollars, a Sterling drop makes fuel more expensive for Britain.
Although some of the predictions doing the rounds seem like serious doom and gloom, uncertainty around a potential “Brexit” has already had a surprisingly dramatic effect on the value of Sterling. Over the past couple of days, Sterling has fallen to its lowest value against the US Dollar since March 2009, according to a This is Money report. HSBC has predicted that things could get dramatically worse in the event of a “Brexit,” forecasting a potential 20% drop in Sterling’s value. It’s fair to say that the drop that’s already happened will probably put some upward pressure on prices, but if HSBC is correct, a vote to leave the EU could take this to a whole new level.
Petrol Prices: Brexit Predictions
Here are a few quotes and predictions on the subject of what “Brexit” could mean for petrol prices.
“Any signs of what it will be like if we “Brexit” will be capitalised on by the “stay” camp as it will add to the fear factor. I think Sterling will continue to be volatile all the way to June 26th and we will see petrol prices nudge upwards as a result.” Jason Lloyd, CEO here at PetrolPrices.com.
“Financial reports suggest leaving the EU could lead to a sharp fall in the value of the pound which in turn could hit pump prices within days.” Edmund King, AA President.
“The impact on fuel prices of Britain exiting is not likely to be as dramatic as motorists might be led to think.” Simon Williams, RAC Spokesman.
As always, there’s no firm consensus! However, the past couple of days seem to suggest that some price increases are almost inevitable while uncertainty reigns.
