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Despite the hype about oil, two key issues are being totally overlooked. The global economy is heading into recession, probably amplified in Britain's case by the current supply disruption. Recession will cut demand for oil and bring its price down naturally. Cause and effect are not always as precise as some analysts would make out.
The Chancellor's VAT rake off is a symptom of excess credit. In the last five years, lending has expanded by 8.5% per annum in Britain. GDP has only expanded by 5.9% per annum. That excess borrowing has been spent and flowed back to the Chancellor through indirect taxes on that spending. The real issue is not how much tax the Government takes on oil. Rather it is the mirage of a public sector budget surplus bought by private sector debt.
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