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The fuel premium, experts say, is not high enough to make a difference.
In the short term, the plan proposes an electronic tax-collecting system, a fuel premium for private cars, imposing parking charges and creating more bus lanes.
It puts a check on out-of-control profits that fuel premium increases that are crushing families and small businesses.
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This cost-shift, in turn, has fueled premium increases and rising medical costs for working families.
This can be compared to the state subsidy of 10,000 SEK provided for buying a flex-fuel car and the flexi-fuel premium charged by Volvo of 6,000 SEK.
Table 7 Option value based on MRM Results Discounteded costs for gasoline 178 729 SEK Discounted costs for ethanol 173 385 SEK Discounted costs for min[gasoline, ethanol] 171 234 SEK Value of Switching option 7 495 SEK Option value − option price (flex-fuel premium) = (7 495–6000) = 1 495 SEK Net value + plus subsidy = (1 495 + 10 000) = 11 948 SEK.
Table 5 Option value for GBM Results Discounteded costs for gasoline 221 479 SEK Discounted costs for ethanol 202 765 SEK Discounted costs for min[gasoline, ethanol] 183 625 SEK Value of Switching option 37 854 SEK Option value – option price (flex-fuel premium) = 37 854–6 000 = 31 854 SEK Net value + plus subsidy = 31 854 + 10 000 = 41 854 SEK.
Synthetic diesel fuels are premium fuel products compared to petroleum fuels.
The case for diesel has been bolstered recently by a narrowing of the fuel's premium over gasoline.
"Clearly there will be a contraction in global insurance capacity which will fuel the premium rate rises we've been seeing since the last quarter of 2000," Mr. Riley, the chairman, said.
The report warns that projects that rely on high oil prices are more risky and once a "fossil fuel risk premium" (FFRP) is added prices would need to reach unprecedented levels of $180 per barrel – more than double OPEC's long-term average assumption of $80 a barrel -- for the business as usual case to be more attractive.
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