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Interesting times
Page 32
Page 33
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Road transport took some big financial hits
last year, not least in fuel and interest rates. So what does 2008 have to offer?
Fuel
There is little hope that the financial burden of high fuel prices will be lessened any time soon.With another duty rise of 2p/lit promised for the spring and prices already averaging i1.05/lit on forecourts, the outlook is grim.
Tax makes up almost 70% of UK diesel prices, but even if there were a way to persuade the Treasury to give some of this back to essential users, there are many other issues driving up the price of oil.
AA head of public affairs Paul Watters says: 'The price disparity between diesel and petrol is once again as great as it has ever been despite them achieving parity earlier this year. US weather reports suggest that heating oil demand will be great over the winter,which stretches supply, and of course diesel in the UK is always vulnerable because we don't produce quite enough to cover the market here.
"The oil price has shown little tendency to drop and my guess would be that prices Will remain high. B at volatility is the name of the game."
Bleak outlook
The outlook is certainly bleak,The petroleum market is looking at a return to the $l 00-a-barrel price of crude oil not seen since the 1980s when the Iranian revolution, the Iran-Iraq war and an energy crisis forced prices skyward.
Suppliers are struggling to meet rising demand in China and elsewhere in Asia; refinery and capacity problems, violence in some oil-producing areas and a weak dollar are all conspiring against increased supplies.
Since the 2003 US invasion of Iraq, frequent bombings of the Iraqi pipeline have made oil exports through Turkey sporadicproblems such as these set the energy/finance community jittering and push up prices. The New York Times commented recently that while the fundamentals all suggested high oil prices in the future, the situation was being exacerbated by dealers' fear.
Export woes
UK operators face an added problem: if the dollar strengthens, our money and export markets will become more expensive, offsetting any possible benefit it will bring to the price of oil.
Whatever the cause,The Freight Transport Association estimates that every penny increase on the price of a litre of fuel costs UK industry
at leastil3Orn.At a
more personal level, a truck running at 8mpg and covering 200,000 miles a year will cost an extra £250 a year to run. •