Richard Schooling's Blog: 5 October 2007

Date: 05 October 2007

Richard Schooling

Petrol prices in some areas have certainly broken the psychological £1 a litre mark, and it looks as though they will remain at this level for a while. Diesel passed £1 in some parts of the country even before the duty rise.

In real terms, however, fuel prices have a long way to go before they hit £1.50 a litre, which is where (in today's money) they reached in 1975 during the oil crisis.

Measured against all goods and services traded in the economy, the cost of today's £1 litre of petrol is about 5p higher, in relative terms, than petrol cost in 2000 - the year of the fuel protest. But in relation to average earnings, it's still a penny or two cheaper (thanks to wage inflation) than it was seven years ago; that may explain why this latest increase in duty provoked only grumbles rather blockaded refineries.

Many fleets have been able to offset the real rise in fuel prices since 2000 by switching to diesel: they've not needed to do much in the way of tackling overall business mileage or fuel efficiency. Now, with crude oil costing twice what it did seven years ago and another 5p worth of fuel duty increases lined up between now and 2009, very little 'easy' slack remains for fleets to take up.

In that sense, the fact that fuel prices are catching up with incomes is good news. If drivers really begin to feel the cost of their personal journeys mounting up, the current widespread indifference to 'eco' driving messages could easily evaporate as quickly as a puddle of petrol on a sunny day.

The challenge for fleets is to be ready with not only the right advice for drivers but also with clear ideas for changing their fleet, travel and training policies to take account of the steeper upward shift that threatens to affect fuel costs over the coming 2-3 years.

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