Has Cameron not read the OBR’s obliteration of the fair fuel stabiliser?

David Cameron has been hosting a rather candid Q&A at a Caterpillar factory in Leicester.

The political nightmare of a choppy economy, rising VAT and spending cuts has been compounded by sharply rising oil and fuel prices. Mindful of that, he told his audience that he was “in talks with the Treasury” about some way of sharing the proceeds of high oil prices in the government coffers.

In other words the “fair fuel stabiliser” unveiled as Conservative policy by George Osborne in 2008. Then he calculated that fuel could have been 5p cheaper per litre with no impact upon the government finances. The extra proceeds from north sea oil revenue used to reduce fuel duty.
However the policy was dropped as a result of the coalition negotiations. But clearly the Government is sensitive to adding budget busting fuel prices to the litany of January misery.

Yet if the Prime Minister had consulted his own creation, the Office of Budget Responsibility, he would have seen its 24 page report from September.

It calculated that a temporary rise in the oil price of £10 per barrel would raise no money for the exchequer, because of the impact on depressing the economy. A permanent rise of £10 could lose George Osborne about £3bn a year, calculated the OBR.

There was a health warning around these numbers, but the broad picture pretty comprehensively obliterated the case for the fair fuel stabiliser.

Now it might well still be a sensible political priority. But reducing duty will obviously anger rail commuters facing multiyear double digit fare rises. And what about the environment?