Motorway #fuelprice policy hits headlines (again) @halfon4harlowMP @FairFuelUK

Clearly if a policy is good enough to be announced once, it is good enough to be announced twice.

I would not want to be dismissive of the stories in the media about the government looking at ways of making data about fuel prices at motorway service stations more transparent to drivers i.e. putting up signs with the information before drivers pull off the carriageway. Indeed, that is very positive. But why, one wonders, is there all this fuss today, because this is not just old news, it is positively ancient.

The announcement actually came in the Budget back on 20 March when the Chancellor, or at least the Budget document, said:

“In response to OFT recommendations, the Government will work with motorway service areas and other relevant bodies to improve the availability and visibility of motorway fuel price information for motorway users.”

The Office of Fair Treading reference relates to the organisation’s report, published at the end of January, into the workings of the petrol and diesel fuel sector which concluded that overall the market was working well but raised concerns about the gulf between high street fuel prices and those found on the motorways:

“While these differences may be explained to some extent by the higher costs associated with running motorway forecourts, the OFT is concerned that drivers are not able to view prices until they have pulled into the service station. It has therefore asked the Department for Transport to consider introducing new road signs that would display service station petrol and diesel prices for motorway drivers.”

The conclusion must be that this matter has become news again today because a) at Budget time there were plenty of other stories vying for headlines and b) this latest announcement is being pushed by the Number 10 policy unit and hence the Prime Minister.

Here at the RAC Foundation we would like to think that we – alongside campaigners like Robert Halfon MP and Fair Fuel UK – helped push fuel prices up the political agenda through our transport poverty work and this is part of why the PM is making a song and dance of the matter now (that and the realisation that drivers have about 35 million votes between them).

Of course, there are only so many times the same policy can be announced before drivers demand to see the outcome. Time for words to be turned into action.

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Why #M6 toll owner has no reason to drop fees even if it is a ghost road @richardwestcott

So much for privatising the road network or encouraging private sector investment in it, now there are those who are calling for those small parts of the network not in public hands to be nationalised.

Today’s FT (page 2) reports a plea for the M6 Toll road to be returned to us and run on our behalf by the government or its agents, presumably the Highways Agency.

According to the paper, Geoff Inskip, chief executive of CENTRO, the West Midlands transport authority, is rightly warning that even with the utilisation of the hard shoulder, the existing M6 route through Birmingham will be even more heavily congested in the future as traffic is forecast to rise by a quarter in the next decade and a half.

He says this rise should be seen against a steady decline in the numbers of vehicles using the toll route, down from a peak of 55,000 a day in 2006 to around 30,000 now.

The operator of the M6 Toll, Macquarie, apportions much of the fall to the downturn in the economy and the associated general decrease in traffic. But this is not the whole story. Much is down to pricing.

To understand why, you only need look at this table from the M6T Research Study Modelling Report by AECOM which is dated 2009 but for some reason was published on the DfT website – along with several other related documents – today:

The figures seem to say it all. Even as you increase prices and traffic violume falls the revenue continues to go up, all the way to a toll of somewhere between £4.50 and £5.00. In the absence of a reason not to, why would an operator have any incentive in doing anything other than maximising revnue especially when – so one would suspect – your costs actually fall: fewer cars = lower running costs in terms of wear and tear, and staffing levels?

Things would be different in a regulated industry where there are limitations on price rises and an arbitrator (regulator) balances the needs of the consumers with the requirement of the companies to make a return. As and when we have more private sector investment in the road network ministers would do well to remember the importance of this role.

As for the M6 toll, don’t expect anything to change soon. While Macquarie apparently discusses with its lenders how to restructure its debt, the DfT says it has no plans to change the ownership status of the route; at least not until 2054 when the current concession ends.

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Fuel and carbon savings vs jobs? European Parliament votes on CO2 targets for cars

The environment committee (ENVI) of the European Parliament yesterday voted in favour of the 95 g/km CO2 emissions target for 2020, including the use of controversial ‘super-credits’, i.e. having sub-50 g/km vehicles count multiple times towards reaching the target. They also voted in favour of a setting a ‘corridor’ target of 68 to 78 g/km by 2025.

At an MEP briefing at the European Parliament organised by the FIA and BEUC (European Consumers’ Organisation) the day before, a number of organisations presented their case for and against the proposals, including topics such as super-credits and the 2025 target. Participants saw contributions from the FIA, BEUC, European Commission, CLEPA (European Association of Automotive Suppliers), Transport & Environment, vzbz (a German consumer organisation), ACEA (the European vehicle manufacturers association), the Dutch automobile club ANWB and the ICCT (International Council on Clean Transportation).

Unsurprisingly, there were two camps: environmental and consumer organisations one the one hand, and industry on the other. The former advocated an abolition of the super-credits system and tighter long-term goals because this would benefit the environment and consumers. Consumers would recoup the extra cost per vehicle (c.€300–€1,000) within a couple of years through far cheaper running costs. Representatives from the automotive industry, on the other hand, argued that the proposals and tight long-term targets would require impossibly high investments from a sector that is already feeling the pain. It also said it doesn’t make sense to set any kind of post-2020 target because there is no sound scientific basis for doing so.

While it is true that industry would have to invest (possibly quite heavily) now, it would recoup the money at later stage because the extra costs per vehicle would be passed on consumers. And it is also the case that there is an increasing scientific basis for setting post-2020 targets: not least our report Powering Ahead by Ricardo-AEA which was co-funded by the UK Petroleum Industry Association.

Rest assured that the battle will continue.

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Improving petrol + diesel cars driving down #CO2 emissions as #EV sales predicted to languish.

Sales of electric cars are set to fall far short of official expectations.

The figures seem to speak for themselves. Electric cars might eventually save the planet but it won’t be for a long time yet.

The Committee on Climate Change has previously said it would be “feasible and desirable” to have up to 1.7 million fully electric and plug-in hybrid cars on the road by 2020. But most industry analysts predict the number will be significantly lower.

Powering Ahead, a review by the consultancy Ricardo-AEA of a range of authoritative market forecasts, shows even the more positive assessments foresee only 200,000 plug-in hybrid and pure battery powered cars being sold each year in the UK by 2020. Some experts think sales of these types of vehicle will actually be as low as 40,000.

It is more than two years since the government introduced the plug-in car grant. Yet even with subsidies of £5,000 per vehicle available only 3,600 cars have been purchased through the scheme.

To put these numbers in perspective, just over 2 million new cars were sold in the UK in 2012. In total there are about 29 million cars on the road in the UK.

This afternoon at the Royal Automobile Club we will be discussing the take up of low-carbon cars and the progress made in cutting transport CO2 emissions with:

• Lord Deben - Chair, Committee on Climate Change
• Professor Stephen Glaister – Director of the RAC Foundation
• Dr Chris Hope – Judge Business School, University of Cambridge
• Professor Dame Julia King – author of the King Review of low-carbon cars
• Doug Parr - Chief Scientist and Policy Director, Greenpeace UK
• Richard Parry-Jones - Chair, Automotive Council / Chairman, Network Rail

Powering Ahead – which was commissioned jointly by the RAC Foundation and the UK Petroleum Industry Association – analysed the predictions made in 14 other major studies for the take-up of low-carbon cars.

Recognising the varying assumptions made in the other reports, and after discounting the most extreme projections, Ricardo-AEA still found widely differing assessments for the scale of green car sales in 2020:

Technology	Market share in 2020	Volume (based on the number of cars sold in 2012)	Market share in 2030	Volume (based on the number of cars sold in 2012)
Hybrids	5-20%	100,000 – 400,000	20-50%	400,000 – 1m
Plug-in hybrids	1-5%	20,000 – 100,000	15-30%	300,000 – 600,000
Pure battery electric cars	1-5%	20,000 – 100,000	5-20%	100,000 – 400,000
Range-extended electric cars	1-2%	20,000 – 40,000	5-20%	100,000 – 400,000

Note: Figures based on analysis of 14 major studies into the take-up of low-carbon vehicles. In 2012 2,044,000 new cars were sold in the UK. Figures in the table are based on a rounded number of 2,000,000.

The report says:

“In the longer term, the likely mix of technologies is extremely difficult to predict. The speed with which plug-in hybrids and pure electric vehicles achieve significant market shares is highly dependent on their total cost of ownership in comparison to that of more conventional alternatives. This is, in turn, dependent on factors such as oil prices, further battery and fuel cell cost reductions, and government policies.”

However, average new car emissions in 2020 are still likely to meet the EU target of 95 gCO₂/km because of the refinement of existing technologies.

This report concludes that the key to making electric cars a commercial success is a major advance in battery technology. Until then these vehicles are likely to remain too expensive and too impractical to penetrate the mass market.

Eventually there will need to be a step change in the type of cars we drive. To help achieve this, the RAC Foundation believes a target for new car CO2 emissions of nearing 60 g/km is needed for 2025. This challenging goal would help preserve the impetus car manufacturers are already demonstrating in terms of technological advancement. Electric cars might eventually come into their own: but there is no guarantee that they won’t be beaten at their own game by other low-carbon technologies.

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So where does our oil & fuel come from? Should security of supply consern us? #diesel #petrol #oil

The 35 million drivers in the UK are increasingly at the mercy of international traders and global events as North Sea oil reserves shrink.

In 2001 the UK’s high oil production meant we could export 40% of it. This compares to a decade later, where 32% had to be imported.

Our ageing oil refineries are also struggling to meet the demand for diesel caused by the growing number of diesel cars on the road. While the UK is a net exporter of petrol, we are a net importer of diesel, having to bring in as much as an estimated two weeks’ worth of our annual usage.

Currently our biggest sources of imported diesel are other European countries – predominantly the Netherlands, Sweden, Russia and Belgium – and the US.

The changing face of oil and fuel production is revealed in research on the UK oil and fuel markets produced for the RAC Foundation by Deloitte, the business advisory firm.

The work by Deloitte shows that:

• In the past decade the number of UK oil refineries has fallen from nine to seven and of those which remain, all but one has been up for sale within the past three years
• As North Sea oil reserves decline, international treaties will obligate the UK to hold much greater reserves of both oil and refined products and will require significant investment in storage facilities
• In the UK, 75% of all petroleum products are consumed by the transport sector.

The recent debates on security of supply have centred on our gas and food needs, but our inability to meet our oil and roadfuel requirements is a potential time bomb. We are becoming more dependent on international markets and foreign suppliers to keep the nation moving.

Not only are our North Sea oil reserves being depleted, our ageing refineries are not configured to produce the quantity of diesel we use. Retro-fitting these plants would cost many hundreds of millions of pounds; money the industry is unwilling to spend. As the closure of the Coryton refinery in Essex demonstrates, the big players are seriously considering selling up or closing down.

As the global economies recover we will be competing with emerging nations like India and China for scarce resources. Even if we can secure the fuel we need from abroad, unforeseen events – war, politics, weather – all threaten the stability of the supply chain and will have an impact on price.

According to the Society of Motor Manufacturers and Traders just over two million new cars were bought in the UK in 2012. Of these, 51% were diesel powered and just about 100% of lorries run on diesel, while figures from the DVLA show that of the 28.5 million cars registered in Britain, 19.5 million use petrol and 8.7 million use diesel. The consequences of a major disruption to supply will be enormous.

A decade ago the UK had nine refineries. Since then both Teesside and Coryton have closed. Of the remaining seven refineries, six – Grangemouth, Humber, Lindsey, Pembroke, Milford Haven and Stanlow – have been up for sale in the past three years, Fawley being the exception.

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The extent of #transportpoverty. Figures show cost of motoring is more nightmare than headache for least well off.

At first glance the numbers seem incredible, but there they are in black and white, courtesy of the Office for National Statistics. The poorest car-owning households in the UK spend at least 27% of their weekly disposable income on buying and running a vehicle.

Scaling up the figures, this suggests that some 800,000 of the least-wealthy homes in the country are mired in transport poverty. If we are concerned, rightly, about fuel poverty, then we should be extremely worried about this.

The previously unpublished data, collected as part of the Family Spending survey, show that of a maximum total weekly expenditure of £167, these households spend £44 on purchasing and operating costs related to a vehicle.

£16 of this is used to buy petrol and diesel, another £8.30 goes on insurance.

For those families who regard it so important to run a car that they are willing to make an outlay of such staggering proportions – and we have always argued that for most of us car use is an absolute necessity – it is clear that every rise in costs merely adds to an already mammoth burden.

Yet for many, what choice is there? In metropolitan London people might be well served with buses, tubes, railways and taxis – but out of the capital, for most people, most of the time, the car is public transport. It is what most of us, rich and poor alike, rely on to access vital services. The difference between groups is that while owning and running a car is merely a financial headache for most, for a significant minority it is an economic nightmare, the proportions of which this data reveals.

Surely if there was a viable alternative (convenient and reasonably priced) then people would take it. To suggest that people happily pay 27% of their income to have a car because they are in any way addicted seems farfetched. They must do it because there is no option.

It is true to say that in real terms buying a vehicle has fallen slightly over the past decade, yet replacing a car is often a discretionary spend, running it is not. People have to buy fuel. They have to insure their vehicle. They have to tax and MOT it. And all these costs have risen far above the rate of inflation.

When the Chancellor makes his Budget statement on March 20^th he would be well served by looking at this official data. In a way it doesn’t matter whether the figures are completely accurate or not; whether it is 27% of income that goes on car ownership, or 37% or 17%. All are of such large proportions as to be of concern.

Fuel costs are clearly only part of the equation, but it is a significant part. We would hope George Osborne remembers this when he makes his next pronouncement on the level of duty.

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@AvivaUK wants middlemen cut out of whiplash claims industry to save drivers £1.5 billion on insurance premiums.

There are an estimated 550,000 whiplash claims made each year, many of them for amounts less than £5,000. Yet for each £1 paid out in compensation the insurance industry (at least Aviva) claims that another 82p has to be found to meet the costs of middlemen lawyers and claims handlers.

Such is the scale of this ‘industry’ that an average of £118 a year is piled onto to each motoring policy to pay for it.

Now Aviva wants to cut out the middleman and see a change in the law that would mean drivers seeking compensation have to go straight to the insurer of the at-fault driver.

Aviva says that all motorists benefit because of lower premiums. It also insists – going by current experience – that the size of payout for a legitimate claim would be the same, perhaps slightly higher, than one obtained by the help of independent lawyers.  What they didn’t quite answer when I spoke to Aviva was whether the overall number of payouts would fall because either drivers were put off going straight to an insurance company (also, Aviva couldn’t completely explain how the process might work – would it literally involve an injured party themselves writing to the at-fault driver’s insurer?) or because they lack the legal knowledge to ask for what they are entitled to.

A second strand of Aviva’s plan involves the establishment of an independent medical panel to check the validity of claimants’ cases. This will draw some sympathy from drivers who have been victims themselves of what the ABI calls the “fraud of choice” for too many people.

The risk of this approach is that another layer of cost and bureaucracy will replace the one that Aviva is looking to remove.

But for any driver struggling to meet the high cost of motoring – not least insurance – these proposals should be discussed. Though one wonders if this is such a good idea why it hasn’t been suggested before?

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Tiring of new #tyre regulations. Trying to get to grips with the latest rules for rubber.

I recently had to buy new tyres.  The last set hadn’t served me well – four cheap ones bought under duress to make sure the car passed the MoT.  They had ruined the handling, so that it felt as if the car barely gripped the road.

I wasn’t planning on making the same mistake again, and I thought that, with the recent introduction of tyre labelling legislation, which compelled retailers to provide consumers with tyre performance data from 1 November 2012, it might be easier this time.

The new tyre labelling legislation classifies each tyre in terms of wet braking, fuel economy and road noise.  The tyre, of course, is the only thing between the road and the car, and it is critical for safe and economical driving.  It is hoped that selling tyres with these new “fridge-like” labels will help motorists to make smarter choices.

These aren’t just marginal savings either.  According to the Tyre Industry Federation, the difference between the best and worst for an average car is 7.5% in terms of fuel economy and a difference of 18m in stopping distance when braking from 50mph.

My local independent tyre fitter clearly hasn’t received the memo about the new regulations.  He offered me two to choose from: the “cheap one” and the “performance one”.  I said I’d prefer a set rated B (the best currently available) for economy and C for wet braking.  He swore a bit and challenged me to find tyres meeting those specs in his storeroom.  I took up that challenge and found plenty – just not in my size.  But we weren’t going to do business, because I thought he was breaking the rules and he thought I was a know-it-all.

So I went to a national chain down the road.  Their waiting room was covered with signs about these new regulations, and when I made my rather specialist request, they seemed keen to show that they had tyres even better than that.

I then waited the hour and a half or so it took to fit their recommendation. As I paid, I asked if I could have a look at the actual label.  There was a pause, then the till operator walked out to my car to chat to the manager.  Three staff stood by the car scratching their heads.  The manager then came back to say they’d fitted entirely the wrong bits of rubber. The fitter who had recommended the tyres which now adorned my car had misinterpreted the stock database. He thought the entry for these tyres had matched – indeed bettered – my required specification, but a quick check of the user-friendly label on the tyre itself showed they were completely inappropriate for what I wanted.

After a reassessment, and at my insistence, another set of tyres – this time matching the spec – were located at another branch 25 miles away and couriered by taxi. When they eventually arrived they came with a nice discount and I finally left with what I had asked for some three hours previously.

Just as with car labelling and fuel economy figures, having the rules in place only goes so far.  What really matters are what the real world outcomes are: whether the fridge label actually makes you buy the better fridge.  Tyre labelling fails in its goals when tyre sellers don’t want to read them, or when they don’t know how to read them.  And it will take many more annoying customers than just me to get this to work as it should.

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So now we know who is really to blame for high fuel prices: the Chancellor. #OFT pinpoints tax as price driver

So there we have it. The UK fuel market is a healthy beast, at least according to the OFT report just published following last year’s call for evidence.

To be fair researchers were unlikely ever to have reached any other conclusion.

The big problem is not what is happening in the fuel market, but what is perceived to be going on. It is a sign of the opaque nature of the whole market that the OFT had to delve into it in the first place. Its murky nature has long meant that drivers have been distrustful of it. But today the OFT has identified the real causes of motorists’ misery at the pumps: the chancellor and oil prices, not the machinations of the wholesale market for refined products.

While all the attention has been on the profits being made after petrol and diesel leave the refinery gates, this report reminds us that the biggest price drivers are taxation and the cost of oil. As it stands George Osborne is currently taking 60% of the pump price in fuel duty and VAT, and a barrel of Brent crude retails at the stubbornly high level of $114.

The Foundation would urge garages to provide a breakdown on their till receipts which reveals to drivers exactly how much the Treasury is taking.

The OFT report found “very little evidence” to support the idea of so-called rocket and feather pricing where pump prices rise quickly in line with wholesale price increases but significantly lag any decline in wholesale prices.

The watchdog does however make reference to the high prices charged at motorway service stations. While accepting that these prices might be associated with the higher costs involved in these sorts of operations it wants drivers to be forewarned of the prices before they actually pull off the motorway, possibly by new signs erected by the DfT.

The OFT has also found no evidence that the increasing dominance of supermarket forecourts has been detrimental to drivers. While there have been closures of independent retailers this has not had a negative impact on motorists, in fact the UK has – pre-tax – some of the cheapest road fuel prices in Europe. Research submitted to the OFT by the RAC Foundation showed that 97 per cent of car-owning households were within ten miles of a supermarket forecourt.

None of this will necessarily come as much relief to hard-pressed drivers who are still paying near-record prices for petrol and diesel, but at least it shines a light on where the ‘blame’ for high prices really lies: not, as many of us might have suspected, at the door of the retailers and wholesalers.

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T-90 minutes to #OFT fuel review publication. Here’s some of the context… @fairfueluk

Diesel price – 140.77p (record high 142.17p April 2012)

Petrol price – 132.95 (record high 148.04p April 2012)

Fuel duty and VAT account for about 60% of the pump price of both petrol and diesel.

There are 35 million drivers and 28 million cars in Great Britain. Of the cars, 19 million are petrol and 9 million diesel.

There were 37,000 petrol stations in 1970 but less than 9,000 today.

RAC Foundation work shows that 87% of UK car-owning households are within 5 miles of a supermarket petrol station. 97% of UK car-owning households are within 10 miles of a supermarket petrol station.

According to work done for the RAC Foundation by the consultancy Deloitte, the UK is now a net importer of crude oil and refined diesel. The reasons are two-fold:

1)     The UK’s North Sea oil reserves have shrunk steadily.

2)     Overall, UK refineries are configured to produce more petrol than diesel, however the demand for diesel has grown over time and the cost of ‘retro-fitting’ our refineries would be prohibitively expensive. Therefore we need to import some diesel to meet our needs.

The Deloitte work shows that ten years ago there were nine UK refineries. Today there are seven. Of these seven, all but one have been up for sale in the past three years.

In 2011 the average household expenditure was £484 per week. £65.70 of this was on transport, 14% of the total.

OFT terms of reference:

• whether reductions in the price of crude oil are being reflected in falling pump prices
• whether supermarkets’ and major oil companies’ practices may be making it more difficult for independent retailers to compete with them
• whether there is a lack of competition between fuel retailers in some remote communities in the UK, and
• whether concerns about price co-ordination and the structure of road fuels markets identified by other national competition authorities are relevant in the UK.

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