Been putting off filling my car up for a week now as it seems to be dropping everyday.
I had to chuckle at certain sections of the media bemoaning the fall in prices. On one hand they bleat about fuel poverty & streetlamps being turned off between 1 and 4 in the morning then moan that lower petrol prices will mean people will be using far more petrol, leaving their lights, TVs and ovens on when they're not using them and taking advantage of cheaper flights. This is especially hilarious given the journalists involved are notorious for jetsetting all over Europe on luxury holidays to their Tuscan mansions or to go see their rent boys. I think after all the monstrous duty rises of the last 15 years, might be nice to let motorists enjoy some short-term relief.
Many are doing the same thing, I now don't fill up because I think it will be cheaper next time. Imagine most motorists do this to some extent, and what it does is slow down the turnover of petrol so reducing income for the oil companies and driving prices down even more. Instead of motorists storing fuel for the oil companies in their tanks, oil companies have to store it themselves at the refineries.
It's how deflation works when everything is falling in price. Lower oil prices are like a tax cut for producers so cost of production is coming down. When it gets passed on and prices on most things start coming down and inflation keeps on falling will people spend more because they can - which is good for the economy, or reduce spending - which is bad for the economy? On balance, most commentators think consumers will be happier and will spend, it's only considered a risk if wages and house prices fall and people feel their wealth is disappearing and defer or reduce spending.
That's why governments are happier with inflation, it can be very difficult to reverse deflation, and why they are liable to hit us with fuel duties if they get nervous.
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It's how deflation works when everything is falling in price. Lower oil prices are like a tax cut for producers so cost of production is coming down. When it gets passed on and prices on most things start coming down and inflation keeps on falling will people spend more because they can - which is good for the economy, or reduce spending - which is bad for the economy? On balance, most commentators think consumers will be happier and will spend, it's only considered a risk if wages and house prices fall and people feel their wealth is disappearing and defer or reduce spending.
That's why governments are happier with inflation, it can be very difficult to reverse deflation, and why they are liable to hit us with fuel duties if they get nervous.