Only the other day, days after the hike in fuel prices (as this newspaper had foretold), a petrol station owner showed customers his weekly bill from Enemalta: this average station gets around four deliveries a week (by bowser) and pays around Lm8,000 per week.

What stumped the owner was the VAT bill he is paying, which is Lm1,000 a week.

Now multiply that by the number of petrol stations and the number of deliveries per week and you can work out what the government makes on VAT from fuel alone.

“I can’t understand how we are always paying more VAT and the deficit keeps growing,” the owner was telling all and sundry.

He might have been referring to the public debt, which is indeed rising, while the deficit is getting lower. But not as low as it should be had the government been more strict with its expenditure figures.

Putting it like that, ie considering the fuel price increase from the point of view of the customer, or user, it is very easy to find many ways in which the price increase could, or should, have been mitigated. Why does the government not reduce the tax imposed so that the price to customers does not have to be increased so much, many argue.

It is possible that the onslaught of criticism that has been unleashed against government for allowing the oil price to be reflected at the pump is what is stopping the government from doing the same to the electricity rates. The huge oil price increase there has been this past year has played havoc with the 17 per cent surcharge imposed in last year’s Budget, about which there was so much misinformation and public controversy.

Going by a back-of-envelope calculation, last year’s 17 per cent surcharge, reviewed in the light of this year’s price increase, must become a 70 to 80 per cent surcharge, if the price increase is to be passed on to consumers.

The government has made a tactical mistake here: while it has been accepted that the fuel price is adjusted at the beginning of every quarter, so that it is now easy to predict when the next adjustment is coming along, the government was wrong to have neglected to adjust the electricity prices, as it said it would do, in March and August.

Now that the adjustment is overdue, and now that the oil price has stabilised at the highest end of the scale, the government seems to be pussyfooting about announcing the increase. The more it delays it, the higher it will be, and the more it will hurt. Furthermore, the government has shot itself in the foot by announcing “there will be no taxes” in this year’s Budget, thereby giving people a false sense of serenity, which it must shatter sooner or later.

This is where the siren voices will be heard: why not reduce the taxes, some may persuasively argue, so that the price increase will not be as bad as it is going to be? Think of the impact, as FOI and others have argued over the fuel oil increase, on business and on consumer expenditure power.

One must preserve a sense of objectivity. First of all, our fuel costs considering the smallness of the country, are nowhere as high as other foreign countries. Secondly, the price at the pumps is still the lowest in Europe. The last one heard from Italy, petrol was selling at euro 1.30, that is around 55c, whereas here it is 44c. Thirdly, all the price hikes over the past year do not seem to have dented consumption: look at the roads, and look at all the SUVs that are coming in.

To transfer this argument to the electricity prices, one has to see what, if any, has been the impact of last year’s 17 per cent surcharge on fuel consumption. Going by anecdotal evidence, there has hardly been any change in consumption patterns. Apart from the fact that Malta has a moderate winter, we do not have the huge heating costs other countries have, although we use more electricity in summer with our air-conditioners than we use in winter.

What a far cry from the price hikes in the 1970s when there were days, then weeks, when cars just disappeared from the roads, and where darkness enveloped the country as people unplugged all light bulbs except the really essential ones!

It is also true that some countries like France played around with the idea of cutting taxes so as to mitigate the impact of price rises but they were warned off by the European Commission and in this, if in nothing else, the Commission is right. It just does not make economic sense for a government to distort the economy by bending the rules and interfering in the operation of a free market.

The world, we included, has not learned much from the past history of oil prices. The oil shock of the 1970s was soon over, as other sources of supply came on stream and, as prices were cut, people still seemed to think that there was an inexhaustible supply of oil for centuries yet to come. So people, led by the most insensitive country of all, the US, kept oil prices low, car companies kept coming up with the most fuel-guzzling cars possible, and there was no incentive anywhere to cut consumption, to economise, and to find alternative sources of energy. The car industry as a whole has neglected the development of cars using hybrid or alternative energy.

The solution, all over the world, and even here, is not to make oil cheaper or less expensive, but to push for the discovery of a lost virtue, saving, energy-saving, plus the discovery of alternative sources of energy and the harnessing of such. It is here that the thrust must be, especially locally. Enemalta has fallen back on the harnessing of alternative sources of energy, of which we have an abundance – sea, wind, sun… Other countries, from Israel to Greece, are far in advance on the use of solar energy by households. Houses are still being built in the most energy-wasteful manner possible: it is only the government which had the courage to come up with an energy saving housing plan at Birkirkara but this does not seem to have had any followers. And, as this newspaper always says, when we speak about the roads, the only way forward is to create a far better public transport system, rather than to make fuel cheaper and more affordable.

It is bad policy to cushion the impact of oil price rises even with the most noble of intentions. The real solution is to keep the prices at the pump or on the meter reflecting the real price the country pays for them but to teach the people, at the same time, to be more conservative in energy matters, less wasteful, and to start making use of alternative sources of energy.