Why gas prices are high

Nothing better illustrates the fickle attention span, the capricious concerns and the essential frivolity of our politicians, journalists and opinion-formers than the present fuss over petrol prices. Pump prices are up by 18 per cent in a year, not because of anything that Gordon Brown has done (the fuel-tax escalator, whereby duty on petrol and diesel went up annually by 6 per cent above the rate of inflation, was abandoned in this year's Budget), but because of a world rise in oil prices which, after Saudi Arabia's recent decision to increase production, is likely soon to end. Nevertheless, an unholy combination of the AA, William Hague and the Daily Mail want the Chancellor to reduce fuel tax and have called for a boycott of petrol stations on 1 August, a silly sort of protest ideally suited to the silly season. A Channel 4 opinion poll finds that nearly two-thirds of consumers want lower petrol prices, even if it means higher income tax or motorway tolls (both of which they presumably expect other people to pay). But weren't we all supposed to be worried about global warming, traffic congestion, despoliation of the countryside, overweight children being driven to school, noise, fumes, road deaths and so on? Ah, yes, but those were another year's preoccupations; the story has moved on. Besides, the weather is cold and wet: who can concentrate on global warming now? Let's send a donation to the fashionable environmental cause of the moment -- Amazonian rainforests, perhaps? -- and keep dry by taking a car to the postbox.

In reality, the story has not moved on. Only last month, the Royal Commission on Environmental Pollution (a body, we should recall, that was set up by the Tories) reiterated the need to cut emissions of carbon dioxide by 60 per cent within 50 years. "Even if the global use of coal, oil and gas was prevented from rising and held at current levels," reports the commission, "the climate would change markedly... Strong and effective action has to start immediately." Transport is only a part of that story, albeit an important one, since vehicle emissions are the third largest source of carbon dioxide and, on current projections, the fastest growing.

We should therefore welcome high petrol prices, the point being not to stop people using their cars, but to persuade them to use them more selectively and efficiently. People may abandon short car journeys (including the school run); they may opt for less fuel-hungry cars; they may reduce speed; they may calculate that any savings from an out-of-town supermarket are outweighed by the costs of getting there; they may press employers to allow them to work at home; they may lobby more vigorously for better public transport. Car manufacturers will have an incentive to invest in research on affordable alternatives to petrol, such as hydrogen cells.

Our romance with the car has created an environmentally vicious cycle, whereby private motoring, so often the most convenient, comfortable and economic choice for any single journey, gradually closes off the other options. Rural bus services dwindle for lack of custom, thus forcing more people into cars until the services disappear. The out-of-town malls suck customers away from small towns and villages, eventually driving them to closure and compelling everybody to take their cars shopping. Rising petrol prices give us the chance of a virtuous cycle, in which the expense of motoring creates market incentives to explore alternatives.

Although many of the most deprived people do not own cars at all, it is objected that high petrol prices hit the poor hardest. But this is true of almost any tax on consumption; it is not an argument against a tax that may be desirable on other grounds, whether it be atobacco or petrol tax. The answer-if either Mr Hague or the Daily Mail is interested--is to reverse the large-scale switch from direct, progressive taxation to indirect taxation (mainly VAT) that was one of the most important consequences of 18 years of Tory rule. A further answer is to increase the frequency, reliability, comfort and affordability of public transport.

Almost from the beginning, Labour has looked uncertain about the environment. The Prime Minister in particular hardly ever mentions it, seeming to lump it in with the closed shop, the North Thames Gas Board and CND as an item of unlamented old Labour baggage. Mr Blair has started to tell the truth on taxation, linking it explicitly to the need for improved health and education services. He should now also tell the truth about the environment, and bury Mondeo man before rising sea levels do it for him.