Summit to calm rising fears over peak oil

Spartacus_Mills

Graham_Devon wrote: »

Petrol prices had a big effect on inflation last time they started shooting up like this, and hitting records.

They raised interest rates in response if I remember rightly to combat this inflation.

Last time round however, we could raise and lower rates. This time round, it's a little more tricky.

Problem is our currency is devaluing at the moment and this will only continue as the currency falls and we import more inflation. There was something on BBC breakfast about veg and fruit coming from Spain rising in price due to the bad weather over there and the slumping currency. This only fuels (no pun intended) the view of those who think we are heading for hyper-inflation. I doubt we are but we do face a reasonably high rate of inflation for a few years, certainly more than we are used to.

Raising interest rates is not really an option at the moment given the fragile state of the economy.

lemonjelly

Harry_Powell wrote: »

There is an easy way to combat inflation caused by petrol - take some of the tax off. Before the usual suspects get all throthy again on here, let's take a moment to remember that approximately 71% of the price of petrol is tax.

Do you really think that'll happen though?
Do you think we can afford to do that?

I doubt it. Instead, Merv'll use this as a defence in not raising IR's when the letter has to be written.

But that misses the essential point, if we need to spend our way out of the downturn - how can we do this if disposable income is falling for households on a weekly basis?

In addition, the costs of goods will be increasing to address transport costs...

Really2

Graham_Devon wrote: »

Problem with taking the tax off is that we have a deficit to reduce.

But putting raters up when the economy is still fairly fragile and increasing the IR on your debt is going to cause more damage to the deficit IMHO.

Graham_Devon

Really2 wrote: »

But putting raters up when the economy is still fairly fragile and increasing the IR on your debt is going to cause more damage to the deficit IMHO.

I would think so too. Which is why I said it's tricky. Not quite sure what they can do.

My own thoughts is letting inflation run.

Harry_Powell

lemonjelly wrote: »

Do you really think that'll happen though?
Do you think we can afford to do that?

I doubt it. Instead, Merv'll use this as a defence in not raising IR's when the letter has to be written.

But that misses the essential point, if we need to spend our way out of the downturn - how can we do this if disposable income is falling for households on a weekly basis?

In addition, the costs of goods will be increasing to address transport costs...

I can see a time where the government have to place a cap on the amount of tax it takes from one resource, especially if that resource is becoming increasingly rare and expensive. There is a direct correllation between economic downturns and high fuel prices. It's therefore a trade off between losing tax revenues from a single source (petrol) or from numerous sources (economy). I'd say that the economy would win that tradeoff.

lemonjelly

Really2 wrote: »

But putting raters up when the economy is still fairly fragile and increasing the IR on your debt is going to cause more damage to the deficit IMHO.

Graham_Devon wrote: »

I would think so too. Which is why I said it's tricky. Not quite sure what they can do.

My own thoughts is letting inflation run.

My feeling, & I suspect the consensus is we're just gonna have to live with it.

Or walk!:D

lemonjelly

Harry_Powell wrote: »

I can see a time where the government have to place a cap on the amount of tax it takes from one resource, especially if that resource is becoming increasingly rare and expensive. There is a direct correllation between economic downturns and high fuel prices. It's therefore a trade off between losing tax revenues from a single source (petrol) or from numerous sources (economy). I'd say that the economy would win that tradeoff.

All very nice in theory. However when is that time? After all, we're talking about the pressures of now. Your post above indicates a view in the future, whereas your post below indicates we could do this now...

A decision needs to be made.

Harry_Powell wrote: »

There is an easy way to combat inflation caused by petrol - take some of the tax off. Before the usual suspects get all throthy again on here, let's take a moment to remember that approximately 71% of the price of petrol is tax.

Really2

We shall see tomorrow, interestingly they have forecast inflation as level.

But yes, I think it is like it or walk.:)

Harry_Powell

lemonjelly wrote: »

All very nice in theory. However when is that time? After all, we're talking about the pressures of now. Your post above indicates a view in the future, whereas your post below indicates we could do this now...

A decision needs to be made.

Why not make it for the government? We had fuel demonstrations started by a single man who ended up bringing the entire country to a standstill. Perhaps you're the next man. Stand up lemonjelly and march on Parliament instead of moaning on here at me - an individual who doesn't even own a car!

Graham_Devon

Harry_Powell wrote: »

Why not make it for the government? We had fuel demonstrations started by a single man who ended up bringing the entire country to a standstill. Perhaps you're the next man. Stand up lemonjelly and march on Parliament instead of moaning on here at me - an individual who doesn't even own a car!

That man would now get arrested as part of the terrorism act. Seriously. The terrorism act was ammended to stop fuel blockades.