Why price rises are fuelling a push to pedal

Published on Wednesday 28 May 2008 22:01

If petrol reaches the 'tipping point', motorists will abandon their cars altogether, writes Alastair Jamieson

EIGHTEEN months ago the "tipping point" was predicted to be 1.10 a litre. This summer it could be as high as 1.83 a litre.

With the cost of petrol climbing to a record high every day, have Scotland's drivers reached their tipping point – the "magic" pump price at which motorists decide their car is too expensive to leave the front drive?

Train travel is up, petrol consumption is down and there has been a doubling in the number of commuters opting to cycle to work.

But despite the intense pressure placed on millions of households by soaring oil prices, our love affair with the car appears to be as strong as ever.

Research by the AA last January showed drivers were prepared to tolerate prices up to 1.10 a litre on the forecourt signpost. But that was back when a litre of unleaded fuel could be bought in parts of Scotland for less than 90p.

A more recent survey by research firm Catalist put the tipping point – at which motorists would abandon their cars and walk, cycle or take public transport – as high as 1.83.

Scotland's average price of unleaded reached 1.15 a litre yesterday, with diesel even higher at 1.20.

So can we expect quieter roads this summer as drivers keep their cars at home? Experts say there are already signs that motorists are "driving smarter" and avoiding unnecessary trips. But despite an outcry over the impact of Gordon Brown's green taxes, there is little chance of drivers giving up their cars altogether.

"It takes a major price hike to change people's behaviour," said Nick Vandervell of the UK Petroleum Industry Association. "Fuel demand is fairly inelastic." Even as fuel prices first began to climb, in 2006, the number of journeys by road increased – with trips made by lorries and commercial vans showing the biggest increases.

Yet there are early signs of a change in behaviour. The Petrol Retailers Association said there had been little change in forecourt sales but morning transactions had dipped, suggesting parents taking their children to school were less likely to fill up for unnecessary trips during the day. "It seems regular trips to the shops are being cut in favour of a single weekly shop," said a spokesman. "The car is perhaps being used for more essential trips like the commute to work. People are driving smarter rather than leaving the car at home."

There are other signs that households are thinking hard about the consequences of oil prices, which have already topped $135 a barrel and could reach $200 before the end of the year.

Cyclescheme, a Bath company which helps employers and workers make the most of tax breaks for cyclists, expects to see up to 40,000 new signatories to a UK-wide government scheme which gives concessions to those who swap the car for the bicycle for the commute to work. That would be double the number who signed up last year.

"We have seen a 100 per cent increase," said the firm's director, Gary Cooper. "When you see the oil price creeping up you know that people will do anything they can to keep a lid on costs, so cycling to work is an obvious way of making savings.

"The scheme allows employers to buy new bicycles and safety equipment and then employees pay back the cost in instalments. The savings can really add up quickly."

Train travel is also on the increase. The Association of Train Operating Companies says Britain's railways have enjoyed passenger growth every year since privatisation. Last year, they carried more than one billion people – a 7.8 per cent rise over 2006.

But inflation-busting increases in ticket prices at the start of this year mean it is far from clear if trains will get busier as petrol prices climb. "A lot of the extra volume on the railway has been generated by filling seats at quiet times that would otherwise be empty," said a spokesman. "During a recession, you would expect a reduction in discretionary leisure journeys, so trains might get quieter during the day or at weekends because people reduce the number of days out. In the last recession there was a fall in the number of commuters as jobs were cut, so the picture is very complex and it is hard to say if high petrol prices will mean busier trains."

Airlines have already hiked fares and surcharges to cover the spiralling cost of fuel. A typical Edinburgh to Heathrow return air ticket now attracts extras of almost 70, of which only 10 is tax, on top of the fare. Ryanair has indicated it will follow some US carriers and ground aircraft this winter as filling them with paying passengers costs more than leaving them on the ground.

So what is the true tipping point for Scotland's motorists, and why haven't the predictions of a national outcry when prices passed 1.10 a litre come true? Pressure groups say other costs of motoring have decreased, reducing the impact of high prices at the pumps. "The price of cars and of insurance for them has gone down in real terms over the last decade," said Estelle Taylor, of the Campaign for Better Transport.

And for many drivers, particularly in rural Scotland, there is little alternative to using the road. "If you live in a rural area or you do shift work, a bus or a train might be of no use," added Ms Taylor. "What if you finish work at midnight and the last bus goes at 11:30pm? It will take an improvement in public transport before we see a dramatic shift away from the car."

The Catalist survey found 31 per cent of drivers had such a low opinion of public transport they would pay more than 2 a litre to keep driving – and 15 per cent would fork out 3.

The AA also denies the cost of motoring has fallen. It says Mondeo Man, who was last year paying 5,611 to keep his petrol car on the road for a typical 10,000 miles, now needs to find 6,256 a year. The 11.5 per cent increase, which is even greater than the 8 per cent rise in 2005, has added a further 6.45 pence per mile to the cost of running a larger family car.

Luke Bosdet, of the AA, said high prices would hit drivers with low incomes hardest. "Most households, businesses and families are able to look at their fuel consumption and find ways of using less or absorbing the cost by making savings elsewhere.

"That isn't possible for everyone, and it is the most vulnerable who stand to lose the most."

BACKGROUND

LAST month, Shelagh Robertson saw the price of unleaded climb past 1.10 a litre and decided enough was enough. The accounts clerk from Dunfermline, who works for a supplies company at Edinburgh Park, now takes public transport to the office or shares the driving with a colleague.

"We need a car when we get to work," explained the 45-year-old. "So for a long time I just ignored the petrol pump price because it was not as if I had a choice. But then it got to the stage where the first two hours of my daily wages were going on getting to work in the first place.

"We talked about getting a pooled company car, but then a colleague of mine who stays in Glenrothes offered to share the car trips. She drives on some days and I drive on others. It is not very convenient, because one of us still has to get the train or a bus part of the way, but it has already saved a bit because neither of us are wasting petrol stuck in traffic jams."