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What caught my eye this week.

They say you should never let a crisis go to waste. But in his Spring Statement Chancellor Rishi Sunak blew it with two crises at once.

Cutting fuel duty was a small, pointlessly populist move. Both the cost and consequences are pretty modest in the grand scheme of things.

But the message it sends is dire.

The cost of a cut

The AA reckons only half the fuel duty cut will be passed on to motorists. What’s left won’t make much difference to many households.

Maybe £100 a year saved on average for a one-car family.

The people and businesses who burn a lot of fuel driving will of course save more. But they are exactly the ones that the tax system should be nudging towards alternatives.

You might say the cost of living crisis is an emergency. Well let’s remember that only six months ago the UN dubbed the latest nightmare IPCC report on climate change ‘Code Red for Humanity’.

The scientific consensus is that burning fossil fuels is heating the planet. And while there’s more debate about the size and scale of the consequences, the precautionary principle should have us acting to reduce this warming at every turn.

The surging price of gas and oil is a perfect casus belli to put Britain on the kind of war footing required to remake us into a low-carbon economy.

That is ultimately what will best preserve our standard of living and prosperity.

Instead Sunak subsidises more fossil fuel burning to cheers from MPs.

Paying for Putin

I know a few Barry Blimps out there imagine themselves to be bold contrarians by refuting climate science.

Well whatever – because today even they have a glaring reason not to be encouraging the burning of more fossil fuels.

Obviously I’m talking about Russian’s war with Ukraine.

At the same time as taking unprecedented economic action against Putin’s kleptocracy, Europe is paying up to $1 billion a day for Russian fossil fuels.

This money props up the regime and the war. We’re not so much talking good cop / bad cop as a bad cop / whisk the prisoner away for a luxury weekend in Dubai cop.

This reliance should have been dialed back years ago. The second best time is now.

Unlike Europe, Britain gets little of its oil or gas directly from Russia. But it’s not nothing – about 3-5% of gas and 6-8% of crude oil. So our hands are not clean. Some of your pounds at the pump go to Putin.

Still, it’s little enough that we could credibly attempt to slash what we spend on Russian fossil fuels to zero, fast.

Take back control

Lopping even the maximum 5p fuel duty cut off a litre of petrol costing £1.65 represents about a 3% saving.

Would it have been so onerous to ask motorists to skip one trip out of 30, or to pursue some other fuel saving measure instead? I don’t think so.

Yes, the sums are relatively trivial. What matters more is the signal.

If we’re to tackle climate change without putting on the hair shirts some argue it’s already too late for, every decision must be the right one. A public gullible enough to vote for Brexit cannot be told this transition will be cost-less and painless. They will bridle at every new initiative.

Professional wrong-man Nigel Farage is already waiting in the wings with his next self-destructive campaign – a referendum to abandon our climate goals.

Farage might dream of the waters of the Straits of Dover rising. But anyone with kids – or a passing interest in the future of humanity – shouldn’t tolerate his bullshit twice.

I happen to agree that in the long-term – as Boris Johnson said recently“green electricity isn’t just better for the environment, it’s better for your bank balance.”

But in the medium-term it will be a costly and disruptive transition. We need to take this seriously. The public must know there’s work to do and a bill to pay. As many as possible must buy into it.

To quote the UN Secretary-General again, the knee-jerk rush for alternative fossil fuels in response to the Russia-Ukraine war is “madness” that will derail our already-insufficient climate goals.

It’s no surprise to see a man with Johnson’s moral compass dash off to to Saudi Arabia to seek to replace one murderous autocrat with another.

But as a nation we must do better.

Where’s my tax cut?

Around this point somebody is typing a comment saying that living in my ivory tower – um, in a two-bed flat in a London suburb – I don’t get the pressure the average person faces due to inflation.

Never mind that I read and link every weekend to various articles about exactly these pressures.

I’ll just conclude by pointing out that the fuel duty cut isn’t even fair by that measure.

Many people don’t drive. So they won’t benefit directly from a fuel duty cut. But they’ll pay for it via taxes.

Many people can cut back on non-essential driving. They can’t cut back on, I don’t know, food. Yet they’ll pay for the fuel duty cut for motorists.

The fuel duty cut is a specific tax break for an activity that threatens our financial future due to climate change – and maybe even our corporal one given the worst-case scenario from Russia.

Fuel rationing via a national speed limit or driving curfews or surcharges would have been fairer.

Alternatively, the money spent on cutting fuel duty could have gone instead on free public transport.

Then again much of the country is less well-served than London by public transport – another problem to fix, not a reason to support fossil fuel subsidies – so perhaps Sunak could have just sent everyone a cheque for their share of the £2.4bn cost of his fuel duty cut?

That way we could each ease the pressure on our finances however we saw fit.

Have a great weekend.

From Monevator

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News

Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1

Spring Statement: what it means for your money – Which

Spring Statement: what’s in it for investors and householders? [Search result]FT

Spring Statement: personal calculator – Guardian

Spring Statement: 12 nasty details hidden in the small print – The Mirror

People face the biggest drop in living standards since 1956 – BBC

Goldman Sachs sees rising recession risks – ThisIsMoney

Weekly Covid cases increase by 1m in UK, figures show – Guardian

Next boss sees its prices rising 8% in second half of the year – ThisIsMoney

Buffett’s Berkshire Hathaway to buy insurer Alleghany for $11.6bn – CNBC

Strange things are afoot at the London Metal Exchange – Front Month

Products and services

Read your energy meter on 31 March, just before prices rise – Guardian

Are vampire electrical devices sucking cash from your bank account? – ThisIsMoney

How to get the best deals on 90% and 95% mortgages as a first-time buyer – Which

Open a SIPP with Interactive Investor and pay no SIPP fee for six months. Terms apply – Interactive Investor

UK green savings bond sales ‘underwhelming’ [Search result]FT

The economics of installing solar panels – ThisIsMoney

Price of ASDA pasta surges 56% as supermarket inflation bites – ThisIsMoney

Homes with glorious spring gardens, in pictures – Guardian

Getting to index funds the hard way mini-special

One man’s long road to passive investing peace – Humble Dollar

How I lost $150,000 in a day – Young Money

Comment and opinion

The Great Resignation might be followed by the Great Regret… – Guardian

…though millennials are apparently still rethinking work – Guardian

Which bond types provide the most diversification benefit? [US but relevant]Morningstar

10 simple tips for better investing – Peter Lazaroff

When the optimists are too pessimistic – Of Dollars and Data

Chinese stocks: the road to nowhere – Morningstar

When is the right time to retire? – The Evidence-based Investor

What happens when you buy stocks in a bear market – A Wealth of Common Sense

Pain and pleasure – Banker on FIRE

Afford Anything with Paula Pant [Podcast]White Coat Investor

How to manage finances and romance after 50 – ThinkAdvisor

What to do during a recession: a timeless strategy – Darius Foroux

Buy what you value – Humble Dollar

Crypt o’ crypto

Multicoin Capital may be the best performing VC fund of all time – The Generalist

Inside the bubble – Seth Godin

Naughty corner: Active antics

Via negativa: what should fund investors not do? – Behavioural Investment

Russia in Ukraine: let loose the dogs of war – Musings on Markets

Keeping it simple in VC – Fred Wilson

The case for quality stocks [Podcast]Morningstar

Factors do work, but don’t try to time them – The Evidence-based Investor

Kindle book bargains

No Spin: My Autobiography by Shane Warne – £0.99 on Kindle

Posh Boys: How English Public Schools Ruin Britain by Robert Verkaik – £0.99 on Kindle

Poverty Safari: Understanding the Anger of Britain’s Underclass by Darren McGarvey – £0.99 on Kindle

Hacking Growth: How Today’s Fastest-Growing Companies Drive Breakout Success by Sean Ellis and Morgan Brown – £0.99 on Kindle

Environmental factors

IPCC scientists to examine carbon removal in key report – BBC

Checking in with the iShares Global Clean Energy ETF – DIY Investor UK

It’s currently far cheaper to charge an electric vehicle than buy gas in America – CNBC

Carbon risks and credit spreads – Klement on Investing

Off our beat

How people think – Morgan Housel

The Russians fleeing Putin’s wartime crackdown – The New Yorker

Covid success to Covid disaster: what happened in Hong Kong? – Grid

Memento Millennial – Ayesha A. Saddiqi

And finally…

“You don’t see something until you have the right metaphor to let you perceive it.”
– James Gleick, Chaos: Making a New Science

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The post Weekend reading: It’s time to stop paying and pacifying polluters appeared first on Monevator.

Rishi Sunak was not duty bound to cut fuel taxes, plus the all the week’s good reads…
The post Weekend reading: It’s time to stop paying and pacifying polluters appeared first on Monevator.

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