The irony of his decision to pay for the reduction in fuel duty by increasing tax on the oil industry will not have been lost on chancellor George Osborne. The calculation is very simple: with profits flooding in at a time of high oil prices – inflated, at least in part, by the conflict in Libya – the industry can afford to pay more. Some companies will no doubt be looking again at their investment decisions in the North Sea and Atlantic, but most will probably conclude that the likely returns make it worthwhile, even with the additional costs. It is difficult to muster much sympathy for an industry which is so heavily subsidised by the public purse in any case – five times that spent on renewables globally, according to figures from the International Energy Authority and financial analysts at Bloomberg last year.
Of more interest from a local point of view is the fact that the goverment’s application for a fuel duty rebate scheme for UK islands, put forward by chief secretary to the Treasury Danny Alexander, is now with bureacrats at the European Commission in Brussels. It is to be hoped that speedy approval can be gained: a further 5p off the price of a litre at the pump would narrow the gap between fuel costs in the islands and the mainland.
Yet however welcome the lower duty is at a practical, everyday level, it is clear that the desire for short-term political advantage has won out over rational policy making on energy. Is the government genuine about helping to wean us off fossil fuels, or just not right now? Why are we not making much greater investment in carbon capture and storage technology? In alternative, less environmentally-damaging sources of fuel?