Expert Blog

Five things to look out for in 2016

We’re still only a handful of days into 2016, so it’s not too late to wish you and all our readers a Happy New Year. And neither is it too late to consider what this new year might bring. Here are five things that are worth looking out for:  

1. The price of oil

We anticipated this as one of the stories of 2016 at the end of 2015 – and, already, it appears to be just that. Since we published that original blog post, the price of Brent Crude has dropped still further, to around $38 a barrel, and there could be more to come. The chief executive of BP has said that oil prices could remain depressed for another two years, with “a low point” in this first quarter of the year.

Of course, this affects the road fuels that are derived from this oil. The price of a litre of unleaded has fallen from 116p to about 102p over the past six months. The price of a litre of diesel has gone from 121p to 107p. And these are just the averages. This year began with news that the main supermarkets would drop their diesel prices to under a pound a litre, as they had already done for unleaded.

2. The balance of car sales

The monthly car registration numbers published by the Society of Motor Manufacturers and Traders are some of the most significant in the business. We don’t yet have the ones for December, but the ones for November tell a fine story all by themselves. In the year to that month, registrations of diesel cars were 2.7 per cent higher than in the previous year. Registrations of petrol cars were 8.3 per cent higher. But – here’s the thing – registrations of alternatively-fuelled cars, such as hybrids, were up by a whopping 41.1 per cent.

Of course, AFVs still only represent a small portion of the market overall. 47,465 of them were registered in that year to November, compared to over a million diesel cars and over a million petrol cars. But that portion appears growing by the day. We shall keep an eye on the numbers, and report back, throughout this year.

3. Osborne and fuel duty

During the last Parliament, we became used to George Osborne cutting, or at least freezing, fuel duty. During this Parliament, as we speculated a few weeks ago, he might decide to raise it. Petrol and diesel motorists could suffer in the next Budget.

Why would Osborne risk provoking voters with this policy? Again, we’ve written about this before. The basic point is that he forewent billions of pounds in tax revenue with his pennies off fuel duty, yet there wasn’t much to show for it. The price of a litre of unleaded still went from 118p in June 2010 to a peak of 142p in April 2012, and back to 102p now. Global fluctuations in oil prices matter far more than anything the Chancellor can do. So, the thinking goes, why should he bother?

Besides, this Chancellor has found another way to appeal to motorists: renovating Britain’s road network. November’s Autumn Statement contained plenty of promises on this front, but no promises on fuel duty. That difference could be telling.

4. The state of the Chancellor’s road schemes

Speaking of Osborne’s plan to renovate our road network, how is he getting on? The closure of 400 miles of roadworks at Christmas created a good impression, but otherwise it’s probably too soon to tell. The £15 billion Roads Investment Strategy that he announced in December 2014 was for the duration of this Parliament, all the way until 2020. It hasn’t nearly run its course.

Yet in 2016 it will have run a year of its course, which is plenty of time for problems to have emerged – and problems will emerge. As we pointed out in our original post on the subject, ‘In 1989, [Margaret Thatcher’s] government published its own plan for improving Britain’s roads, called Roads for Prosperity, but many of its schemes were later cancelled after spending cuts and protests. Road-building, like so much else in politics, is a difficult thing.’

5. News from California (and Milton Keynes)

Everything that we’ve mentioned above – the fuel prices, the car sales, the pothole repairs, all of it – could one day be rendered more or less meaningless by what’s happening over in California. What are the likes of Google and Tesla and Apple up to in the field of motoring? Will we hear anything more, this year, about their advances in autonomous or electric or smart technology?

But we don’t have to look solely across the Atlantic for news. Last year, the Government provided funding or permission for various driverless car schemes, including the testing of self-driving ‘pods’ in Milton Keynes and Coventry. The outcomes of these tests, or similar, will surely help determine how much they continue to invest in autonomous tech. Which will, in turn, help determine how ready Britain is for the coming revolution. 2016 could be a big year for the future.

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