21st June 2026
governments still have some levers, but they are much weaker than many people imagine.
Oil and gas are traded in global markets, so no single government—especially one the size of the UK—can simply order prices lower. However, governments can influence what consumers pay.
What Governments Can Do
1. Cut Fuel Taxes
The quickest lever is taxation.
In the UK, motorists pay:
Fuel duty
VAT on fuel
A government can reduce these taxes to lower prices at the pump. The downside is that it costs the Treasury billions in lost revenue.
2. Reduce Energy Taxes and Levies
Governments can remove or reduce charges added to household energy bills.
For example:
Environmental levies
Renewable energy support schemes
VAT on domestic energy
This doesn't lower the wholesale gas price, but it can reduce the final bill.
3. Subsidies and Price Caps
Governments can effectively pay part of the bill.
The UK's Energy Price Guarantee during the 2022-23 energy crisis is an example. Consumers paid less than the market price, while taxpayers absorbed part of the cost.
4. Release Strategic Reserves
Countries such as the United States maintain large strategic oil reserves.
Releasing oil can increase supply temporarily and help calm markets, although the effect is usually limited unless several countries act together.
5. Encourage Domestic Production
Governments can:
Approve new oil and gas fields.
Speed up licensing.
Support infrastructure.
This can increase future supply, but it usually takes years rather than months.
Supporters argue this improves energy security. Critics argue that global prices still largely determine what consumers pay.
What Governments Cannot Easily Control
Governments struggle to control:
Wars and geopolitical tensions.
Decisions by OPEC and its allies.
Global demand from countries such as China and India.
Major disruptions to shipping routes such as the Strait of Hormuz.
These factors often have a much larger impact on prices than domestic government policy.
The UK's Particular Position
The UK still produces oil and gas from the North Sea, but not enough to fully insulate itself from world prices.
Many people assume that because Britain produces oil and gas, the government could simply sell it cheaply to UK consumers. In practice, producers generally sell into international markets, and prices are linked to global benchmarks.
That means even if Britain produced more oil and gas, UK consumers would still largely face world market prices. The main benefits would be:
Greater energy security.
More jobs and investment.
Reduced imports.
Higher tax revenues.
Looking Ahead
If tensions in the Middle East persist, governments' options are mostly about softening the impact rather than controlling the price itself.
The most powerful long-term lever is increasing the amount of energy available—whether from oil and gas, nuclear power, renewables, storage systems, or improved energy efficiency. More supply generally means lower prices over time.
For a country like the UK, the debate is increasingly shifting from "How do we make oil cheaper?" to "How do we make households less vulnerable when global energy prices spike?" That is a much broader question involving energy policy, housing insulation, electricity generation, and domestic energy production.