April 17, 2008 | Graham

Fuel fools

The federal government’s new FuelWatch is likely to be as effective in lowering prices as those proposals contained in nuisance emails that still circulate the Internet. The ones that say we can force petrol companies to lower prices by boycotting one of the petrol brands for a while, the idea being that the company boycotted will be forced to lower prices in desperation, which will send the whole market down. Just like this proposal, some of those emails even come to me from otherwise apparently intelligent people.
Petrol retailing is a very competitive business. It’s high volume, which makes skinny margins possible, but in many cases, fuel is the loss-leader which gets you into the convenience store attached to the petrol station where more money is sometimes made from the sale of a Mars bar than a whole tank of petrol.
To think that forcing some additional transparency on the industry is going to make more than a widow’s mite of difference to the average family budget is pure fantasy.
Kevin Rudd has had an impressive couple of weeks overseas, but the good impressions will sour quickly without a compelling narrative for some of our looming domestic problems. Voters won’t thank him for gallivanting around overseas polishing his Mandarin if they’re struggling to pay petrol and mortgage bills off a shrinking asset base. Instead of wasting millions of dollars (I think I heard the figure 45 on radio, but can’t track it down) pretending that the government can do something to lower the price of fuel, they ought to be talking up the fact that fuel will inevitably increase in price.
And by “they” I guess I mean Wayne Swan, who as Treasurer is the Minister for Bad News. The only way Australians are going to decrease their fuel bills into the future is to drive smaller cars, hop on their pushbikes, or get shanks’s pony into their Reeboks more often. If we’re serious about global warming, and/or accept the realities of peak oil, then it’s the inevitable anyway.
A by-product of levelling with the Australian people is that a serious chat could do more to contain inflation than a couple of RBA rate hikes.

Posted by Graham at 3:46 am | Comments (1) |
Filed under: Economics

1 Comment

  1. We have enormous amounts of natural gas.Why hasn’t our Govt given tax incentives for people to convert their cars?
    In a short period we have become nett importers of oil to the tune of $10 billion pa;surely it would be in the national interests to to use our own energy at cheaper prices.This also would make us more competitive internationally.
    We have a natural advantage over China in terms of energy and resources,yet we don’t exercise it.Natural gas was 30c a litre just a few yrs ago,now it is 70c a litre.
    It seems as Dick Smith has constantly alluded to,we no longer control the purse strings of our own continent.
    We are beggars,who no longer have belief in our ability.

    Comment by Arjay — April 17, 2008 @ 8:56 pm

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