Lessons of the fuel crisis
As we go to press the threat is looming of another fuel crisis, the first having broken out a few days after the last issue of
appeared at the beginning of September 2000. The crisis arose when pickets of lorry drivers and farmers congregated on 6 September 2000 outside Britain’s various petrol depots thereby impeding distribution of fuel to petrol stations, which ran dry. Fuel ran short even for essential services and deliveries.
On 15 September the protest was called off, but only on the understanding that the government would ‘do something’ to address the concerns of protesters before 13 November. This date is now fast approaching without the government having announced what concessions, if any, it will be making to the protesting groups, though there are signs that it has taken steps to be in a position, should the blockades be restored, to smash them by force. For instance, some 1,000 army personnel have been trained as tanker drivers.
It was undoubtedly enjoyable to people from the most downtrodden sections of Britain’s working class, whose longing to hit back at their oppressors is constantly being frustrated as a result of the vice-like hold of social democracy on the working-class movement in this country, to see the silly grin wiped off the face of prime minister Blair by the militant actions of petty-bourgeois lorry drivers and farmers. Such simple pleasures apart, however, to what extent is this protest one in which the working class is interested? And if it is interested, which side should it support?
Background to the crisis
There are two factors which lie behind the fuel protests, which have been taking place not just in the UK but all over Europe. The most immediate factor is a sudden steep rise in the price of fuel:
In the last 18 months, oil prices have tripled, and what was recently thought to be a temporary rise towards $30 is now beginning to look more like an obstinate trend … today’s price is almost 50 per cent above the average for the last 14 years in real terms,”
leader of 25 August 2000.
The second factor is the permanent tendency of capitalism to proletarianise the petty bourgeoisie. As capitalism in its death throes staggers from crisis to crisis, small businesses are snuffed out in their hundreds of thousands, bereft as they are of sufficient resources to tide them over the hard times. The ruination that threatens small businesses, including small road haulage firms and farmers (even though the latter are exempt from the fuel duty which accounts for 78% of pump prices), impels them to fight for survival if they get the chance. Rapidly rising fuel prices have provided an apparent cause around which they can all rally, enabling them to have some effect fighting as a group rather than in isolation from each other.
Unfortunately, however, even from the point of view of their own interest in survival, the issue is a lost cause. The lack of profitability that blights these businesses is not due to high fuel prices but to weakness in the demand for their services relative to supply. There are too many competitors around prepared to undersell. If any European country, or countries, in response to the fuel protests, does introduce some method of subsidising hauliers, such as a reduction on the price they pay for fuel, all that will happen is that haulage rates will fall too. The hauliers will continue to be as pressed as they were before, until such time as a good few of them have been driven out of business, the balance of supply and demand tilts back in favour of the survivors, who can then increase their rates and still be able to get custom and make a profit.
Farmers, of course, are a special case. Their problems are caused by competition from gigantic agro-business multinationals who have managed to cut their production costs to the bone and are thus in a position to drive all small operators, who can never be as economically ‘efficient’ as they are, to the wall. Lower fuel prices can do little to help small farmers. In fact they already receive a discount of 42p per litre on the diesel they use for farm purposes (the ‘red’ diesel, dyed red to prevent illegal use in non-eligible vehicles). Such concessions can help them marginally in some cases to survive the onslaught of agrobusiness competition, but it won’t help a lot, just prolong the agony of their fairly inevitable demise.
Marx and Engels, a long while ago, pointed out that with the advance of industry, and the concentration and centralisation of capital consequent upon it, the petty-bourgeois strata
“…sink gradually into the proletariat, partly because their diminutive capital does not suffice for the scale on which Modern Industry is carried on, and is swamped in the competition with the large capitalists, partly because their specialised skills are rendered worthless by new methods of production”
Manifesto of the Communist Party
The tax on fuel
If, as explained above, straightforward subsidies cannot protect them from extinction in the battle of competition, it follows that any reduction of fuel taxes cannot help them either. This tax is an operating expense for every single haulier operating in the UK, be he British or foreign. If they drive on British roads they have to refuel at British service stations and pay the higher British forecourt prices. Likewise, if they operate abroad, say in France, where unleaded petrol is 10p a litre cheaper, or in Germany where it is 30p a litre cheaper, they refuel at French or German service stations and pay French or German prices, even if they are British. In a fairly pathetic attempt to build some support for their party, the Tories have floated the idea of a ‘Britdisc’ that would enable British hauliers to purchase petrol at a cheaper price than their non-British competitors, which the hauliers would love. Such a scheme, however, would be illegal under the free trade rules of both the EU and the WTO. If implemented it could only lead to other countries introducing measures to favour their own nationals at the expense of the British, perhaps even more. At least under a no subsidy regime there is a more or less even playing field. The most that could be done legally is for hauliers to be exempted from road tax. Such a measure, however, would do little to protect British hauliers from the effect of competition, the worst being that coming from southern Europe and former eastern bloc countries where the cost of living is much lower than in most of the more northerly European countries. Truck drivers from low-cost countries are able to satisfy their personal needs on lower profit margins and are thus able to work for lower rates than the British, French and Germans. Nothing that British hauliers are doing or can do can shelter them from the dire effects of this competition.
The oil companies back the protesters
In fact a reduction in tax would benefit the relatively well-off sections of the population, and primarily the oil companies, which explains what might otherwise be the curious circumstance of the indulgence with which the bourgeois state and its media reacted to the fuel protesters during the first protest. The
of 14 September, for instance, reported that pickets were, in an atmosphere of “
“, even served with
“tea and bacon sandwiches … from the canteen of the very oil terminal they were blockading”
(Maurice Weaver, ‘Chummy protest hides drivers’ grim resolution’)
of 16 September (‘Men in black’), notes that
“few if any of the refineries were being physically blockaded by the protesters; rather the petrol shortages that quickly arose across the country were caused by the tanker drivers
[employed by the oil companies]
who were seemingly unwilling to move supplies …; the oil companies’ behaviour has hinted at collusion with the protesters”.
Damn heavy hinting it was too, we might add! It is clear that the benevolence of the oil companies towards the protest is related to their desire to increase the profit they make on petrol sales, which is now reputedly less than 1p a litre. Their perspective is that if petrol duty is lowered by, say, 3p a litre, they will be able to ‘split the difference’, and double their profits on petrol sales by reducing prices only 2p.
This cavalier attitude of the oil companies is considered by the government to be highly irresponsible. On the one hand, the oil companies are reporting record profits arising out of the world increase in the price of oil, which has benefited the companies to the extent of doubling their profits this year as compared to last, so the government takes the view that there is no need for them to be so mean as regards the profits they make on retail sales. On the other hand, the government, on behalf of the interests of the bourgeoisie as a whole, is dismayed by the oil companies’ shortsightedness in encouraging civil disobedience. As Philip Stephens of the
points out on 29 September:
“How close to the brink the country came during the fuel crisis is only now emerging. Just before the blockade was lifted, supermarkets privately warned that food supplies could be guaranteed only for another 24 hours. One of the world’s largest car manufacturers was 12 hours away from closing all its European production sites. The health service was perilously close to shutdown.
What shocked ministers was their powerlessness. Mr Blair and others pulled the levers of authority and found the cables had been disconnected. Where is the contingency plan, Jack Straw, the home secretary, asked advisers as the crisis unfolded. There wasn’t one. No one had thought of the immense leverage that just-in-time distribution had handed to a few truck drivers”.
All this being so obviously so,
“If petrol duties come down in the November pre-budget report, the protesters will have won – just as in France. Every other special interest group in Britain
[including the proletariat as a whole!]
will understand the lessons. Mr Blair must be prepared.”
One assumes that whatever plans Chancellor Gordon Brown is about to announce in his pre-budget review, the oil companies will either have been convinced of the error of their ways, or, more likely, been bought off. In fact, as we go to press, the news has come in that Chancellor Brown, not surprisingly, has decided “
to let oil companies off the hook in his pre-Budget report tomorrow in spite of calls for their soaring North Sea profits to be taxed more heavily to fund fuel tax concessions”
7 November 2000). Surely a tax on the burgeoning profits of the oil companies from their oil-exploration and extraction business would have brought in the huge sums of money that we are constantly told would be lost to schools and the NHS in the event of a reduction in fuel duty.
If the protesters do recommence their agitation, it will be a very different scenario on this occasion. The “contingency plans” will be in place, and the government will be bent on using the occasion to demonstrate to any
“other special interest group in Britain”,
i.e., to the proletariat, that if it thinks it is going to be as easy to hold the bourgeoisie to ransom as it was for the lorry drivers and farmers during the first fuel crisis, then it is very much mistaken. If the lorry drivers and farmers try to blockade a second time, they must realise that the probability is that the government will be looking for broken heads and bankruptcies to hold up for terrorisation purposes, to undo the harm done to bourgeois order by the relative success of the first fuel crisis.
Fuel duty is a tax on the relatively well-off
A cut in petrol duty, moreover, would be of no benefit to most workers. Only about half the households in the UK have cars, and we can surmise that the reason for most people having no car is that they cannot afford one. The poor, therefore, do not pay petrol duty because they do not buy petrol. It is a tax which, for a change, falls disproportionately on the relatively wealthy. That being so, it is a tax we should favour. Of course, there are hard cases – people living in rural areas where there’s no bus to take them to the nearest shop or post office ten miles away. But people who cannot really afford to run a car would be far better served by a decent bus service subsidised from taxes than by a tax reduction. In fact, according to the
Independent on Sunday
of 15 October,
“… a public opinion poll carried out … by NOP at the beginning of this month
… showed that, while 80% of Britain believed that fuel taxes were too high, more than two-thirds would prefer investment in public transport and clean fuels to a 3p cut in duty”
(Colin Brown and Geoffrey Lean, ‘Crisis in the Middle East’).
Fuel tax and the environment
This NOP opinion poll shows not only that the public favours improving public transport over cheaper fuel, but also that it is concerned over the environment. In fact, escalating petrol duty has for some time been part and parcel of the government’s attempts to reduce emissions of carbon dioxide in accordance with its international undertakings. Quite apart from the fact that the Chancellor has already chickened out of the original fuel tax escalation programme, it is undoubtedly the case that fuel taxes are not high enough and public transport is not cheap enough or convenient enough to make much of an impact on environmental protection. 84.3% of goods are delivered by road, as compared to an EU average of 73.1% – which is still high. 87.7% of passenger journeys are by road, as compared to an EU average of 81.8%. The carbon dioxide emissions from all this road traffic cannot but cause environmental damage, quite apart from the square miles of countryside that are tarmacked over to build all the new roads that all this traffic necessitates.
Certainly the initial reaction of the environmental group, Greenpeace, was not to leap to the defence of fuel taxes, but to encourage the pickets to blockade the refineries. Taking cars off the road during the protest brought about a 25% reduction in greenhouse gas emissions for the duration. Increased fuel taxes have never had such a dramatically beneficial effect on the ecology. It seems, however, that Greenpeace is now back on message, and has responded to the government’s call to defend high petrol taxes.
“Two thousand ‘green’ protesters are standing by to confront farmers and truckers if they carry out their threat to blockade oil refineries next month in the campaign to reduce the tax on petrol”
(Colin Brown and Geoffrey Lean,
The fact is that it is absurd to imagine that one can deal with the problem of environmental pollution with tax adjustments. The problem is far too deeply entrenched to be significantly affected by such tinkerings.