Oil costs persuade drivers to take bus

Listen to this article


Alistair Darling’s postponement of the 2p fuel duty rise comes as evidence emerges that high oil prices are starting to reduce demand for car travel as fuel duty increases were originally intended to do.

The rise would have been only the third since October 2003 and, according to the Treasury, duty is now 17 per cent lower in real terms than in 1999, before the scrapping of the regular above-inflation increases John Major’s Conservative government introduced.

Sir John’s government brought in the above-inflation increases to counteract growing congestion, pollution and greenhouse gas emissions resulting from the gradual, long-term falls in the cost of motoring created by more fuel-efficient and cheaper cars.

However, the rising oil price now appears to have taken over from increasing duty in counteracting that effect. Stephen Glaister, a transport economist who is chairman of the pro-motoring RAC Foundation, said figures up to April this year showed motoring costs flat in real terms over the past 10 years, while fuel price increases since then probably meant costs had now risen.

Motoring costs have still not kept pace with the faster rise in the cost of using buses and trains.

But there are signs that rising costs and a worsening economy are dragging motorists out of their cars and on to public transport. Figures from the Department for Transport show overall car traffic for the first quarter of this year was 2 per cent lower than in the first quarter of 2007. There have, meanwhile, been strong increases in passengers on buses and trains. The effect on motorists of the postponed rise in fuel duty would be more than outweighed by scheduled increases in vehicle excise duty that were still going ahead, Professor Glaister added.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.