There are few constants in life: death and taxes. And as we’ve moved through the centuries, to our dismay, we’re not much closer to cheating either, but we might just be able to lessen their reach and even delay them for a while.
What if we could make some taxes look so bad that the government wouldn’t dare levy them? After all, who the hell is going to be daft enough to tax used cooking oil?
In the first installment, I looked at the proposed ‘pay as you drive’ scheme and what such a scheme means to the average motorist.
In the second installment, I looked at what forces might shape a different route going forward, but still manage to please both the government and the consumer alike .. but maybe not the petrochemical industry, or the tax man.
In the third installment, I looked at how new ways of doing old things can be disruptive and affect good changes in a bad way.
In this final installment, I will look at how an unlikely alliance between the supermarkets and farmers could leave the petrochemical industry running on fumes.
Thars oil in them thar fields!
So the farmers have struck a better deal with the supermarkets. The consumer is getting their food quicker and fresher and they’re local, too. But the farmers haven’t finished, yet. The next cash crop is bio-fuels.
From what I’ve read, refining bio-fuels isn’t nearly as hard or as resource-intensive as refining crude oil into petrol, diesel, gasoline, kerosene et cetera. In fact, there are people out there refining their own fuel from the comfort of their back yards!
I’d say it’s only a matter of time before some farmer latches onto this way of thinking and start refining bio-fuel on site. And this is where the game becomes very, very interesting indeed.
So the major supermarkets aren’t making the profits they’d like from selling petrol. What’s the alternative? As I speculated previously, they’ve already managed to cut costs by forming closer links with the local farmers who’re supplying to their local min-markets.
What if the supermarkets started selling bio-diesel right from their forecourts? What if they kick the likes of BP, Esso, Shell et al into touch and start selling bio-diesel direct?
Imagine the cost savings on transport & distribution alone. Imagine the mark-up the supermarkets could make. Imagine how utterly pissed off the likes of BP, Esso, Shell et al would be?
We’ll take it for granted that some Quality Control procedures would need to be put in place and stringently met with to ensure the bio-diesel end product isn’t going to require an engine rebuild after 10,000 miles.
In this scenario, no matter what the major petroleum suppliers do, they can’t compete. Short of buying into the supermarket chains or buying up huge tracts of the British countryside to corner the production, they don’t have a clear answer.
Also, the British government would then have somewhat of a conundrum on their hands. What do they tax?
Given that not only can the original vegetable oil product be used, but also the waste from cooking fat, the government would have to consider taxing the refining equipment.
My feeling is, they would because they’d have no choice, but they run the risk of killing an industry before it has a time to grow.
Assuming the government were so inclined, they would have to endure some kind of transitional period whereby they waive taxation on refinement equipment while at the same time watching their coffers drain as fewer people buy regular petroleum products in favour of the bio-fuel alternatives.
In addition, as I stated earlier, the refinement process used to create bio-fuels isn’t terribly difficult or expensive, so what’s to stop people producing this stuff in their garden shed at the end of their allotment?
Assuming the government do tax the equipment, policing the production of bio-fuels would be nothing short of impossible .. unless they chose to add a colour to fuel, perhaps? How ironic would that be?
If you’ve followed me this far, you’ll have noticed more than a few ‘ifs’ and ‘buts’ along the way. But not one thing that I’d proposed is outside the realms of possibility.
Innovation has a habit of emerging from the most curious of sources, but the best ideas are often the most lucrative ones. However, for someone to succeed, someone else usually has to fail.
If the loser has to be the petrochemical industry, is that such a bad thing? If the consumer is the ultimate winner, I’ve got no problems with the oil industry being just so much road kill…