Monday, August 18, 2008

Why “The cost of fuel will continue to rise” is a lie – and why it means you must start making your own fuel at home.

It seems like every day now I read or here somewhere some luminary saying that no matter what the cost of fuel will continue to rise. The fact is that’s a lie. Let me qualify that; I can say for certain that the cost of fuel does not have to rise, it’s a choice.

Since the summer the fuel you buy at the pump whether gasoline or diesel is blended 5% with biofuel – ethanol in the case of gasoline and biodiesel in the case of diesel. As part of the governments plan this will be progressively increased over the coming years to 20%.

Simply put that means that 20% of the fuel that goes into your tank will not be dependant on the price of fossil oil. But will that mean that the cost of the fuel you put in your tank goes down by 20%. Sadly no. In fact you’ll be lucky if it just stays the same.

Why? Afterall biofuel is cheap and easy to make. It can be made locally from local waste products removing transpostation costs and waste processing costs. Duty on biofuel is discounted – so why won’t the price of fuel go down like it should?

Your government has a vested intrest in maintaining the cost of fuel – it is one of the highest reliable tax earners in the governments arsenal. They know that after a century of promoting private car ownership and use they have created a captive market of fuel users. We have followed their advice and built our career choices, social lives and family lives around the automobile and the fuel it runs on.

Fuel Duty in the UK is £0.5035 per litre (2.2890/imperial gal or £1.91/US gal). Value Added Tax (VAT), currently at 17.5%, is also charged on the price of the fuel and on the duty. At a pump price of 128.8p/litre (typical for diesel as at May 2008), this would put the combined tax at 69.53p/litre, or approximately USD$5.20 per US gallon. Thus without tax, the retail price would be 59.26p per litre, making a combined tax rate of 117%. Fuel taxes in the United States vary by state. For the first quarter of 2008, the average state gasoline tax was 28.6 cents per US gallon, plus 18.4 cents per US gallon federal tax making the total 47 cents per US gallon (56 ¢/imperia gal; 12.4 ¢/L). For diesel, the average state tax is 29.2 cents per US gallon plus an additional 24.4 cents per US gallon federal tax making the total 53.6 cents US per gallon (64.3 ¢/imperial gal; 14.2 ¢/L).

Why else do you imagine with two viable, long range performance electric cars now available from two manufacturers (the UK Lightning and the US Tesla) that the government hasn’t leapt into action to promote the technologies they have developed, to subsidise their manufacture to ensure that we all drive clean green machines? Because with your garage roof covered in solar cells and a usable electric car in the garage you don’t have to pay them a bean!

So instead the government will continue to charge up to 117% tax on fuel - regardless of what actually goes into your tank.

Fortunately whatever side of the atlantic you are on there IS something you can do about it. You can make biodiesel at home, you can even make ethanol at home. All the equipment you need can be purchased or assembled from £200/$400 upwards, the consumable supplies easily ordered online and the process in each case takes no more than a couple of hours in the weekend. The government even sanctions home production tax free (because they know most people won’t bother).

However unless you make biodiesel or make ethanol at home you are surrendering your self to a future or spiralling fuel costs, 85% of which will be government tax.

And consider this; the average cost of homemade biodiesel and ethanol is around £1/$2 per gallon, which if you do some simple napkin maths means Joe Average could easily save £2000 / $4000 per year, every year, and that’s just the average value.

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