Pumped up oil prices a slip­pery business

Dubbo Photo News - - Contents - BY JOHN RYAN JOUR­NAL­IST

IDIDN’T con­tact the fuel com­pa­nies or their peak or­gan­i­sa­tion for a com­ment on just why Dubbo mo­torists are get­ting ripped off, be­cause they don’t de­serve the right of re­ply.

For years petrol prices in Aus­tralia at large, and the never-prop­erly ex­plained dif­fer­en­tial be­tween cities, towns and re­gions has been a source of un­end­ing fury for mo­torists, at the same time an un­end­ing source of preda­tory prof­its for them.

I’ve spent hours talk­ing and email­ing all sorts of oil com­pany PR spin doc­tors and none of what they say ever makes sense when it comes to just why the prices should be so dif­fer­ent.

I just don’t have the time, or the in­cli­na­tion, to once again sit through a con­ver­sa­tion I know will be all lies, smoke and mir­rors from their side – they charge what they think the mar­ket will stand, that’s the sim­ple fact of the mat­ter.

They talk price cy­cles, they talk whole­sale and re­tail, they talk Sin­ga­pore as the bench­mark for Aus­tralian re­fined prices, but none of that, none of that, ex­plains why Welling­ton ser­vos can sell at $1.11 per litre on the same day Dubbo mo­torists are be­ing gouged at up to $134.9 for the ex­act same thing – 23 cents ex­tra for a sin­gle litre of un­leaded petrol.

The fact at least one Syd­ney servo was sell­ing un­leaded at $102.5 this week make that gap 32.4 cents.

Let’s look at a sim­ple back-of-the-en­ve­lope cal­cu­la­tion – if there are 20,000 ve­hi­cles in and around Dubbo and they av­er­age a fuel us­age of 100 litres per week – that’s a to­tal of 2 mil­lion litres.

At a price dif­fer­en­tial of 23 cents that’s $460,000 lo­cal mo­torists are be­ing ripped off each week, at 32 cents it’s $640,000 a week, or more than $33 mil­lion each year.

The irony is that the higher the re­tail price is, the fuller be­come the cof­fers of our com­mon­wealth gov­ern­ment, with a 38 cent per litre fed­eral ex­cise and cal­cu­lat­ing the GST at al­most 13.5 cents, that means the feds are get­ting 51.5 cents for each litre that goes through Dubbo’s pumps, and con­sid­er­ing there’s plenty of through-traf­fic fill­ing up at lo­cal ser­vos, this city is a cash cow for them to an even greater ex­tent than the fuel com­pa­nies.

Yet we strug­gle to see much of that money pumped back into roads like the Newell High­way.

This is the un­der­ly­ing rea­son why suc­ces­sive gov­ern­ments have made plenty of noise about get­ting tough on fuel ripoffs, yet done noth­ing to fix it – they’re the big­gest of­fend­ers, and they all know they need that re­li­able in­come stream thanks to a bloated and in­ef­fi­cient pub­lic ser­vice, along with the fact so many gov­ern­ment pro­grams are waste­ful in the ex­treme.

So much for petrol com­mis­sion­ers, so much for petrol om­buds­man, so much for any help from gov­ern­ment or the ex­pen­sive tooth­less tiger that is the Aus­tralian Com­pe­ti­tion and Con­sumer Com­mis­sion (ACCC), none of those po­lit­i­cal prom­ises to fix this rort have ever borne any fruit.

The best thing that ever hap­pened to these oil com­pa­nies was Aus­tralia chang­ing from the Im­pe­rial to the Met­ric sys­tem of mea­sure­ment.

My first job as a kid was pump­ing petrol at dad’s Amoco ser­vice sta­tion, where as a sub-10 year old I’d ask peo­ple how much fuel they wanted be­fore check­ing the oil and water, pump­ing up tyres and wash­ing wind­screens – all that for 16 cents per gal­lon which at times was dis­counted by four cents dur­ing the price wars of the late 1960s.

Imag­ine if we were still work­ing in gal­lons these days, I’m sure peo­ple would no­tice, while trav­el­ling through Wello, that petrol in that town was $1.03 less per gal­lon (an Im­pe­rial gal­lon equals 4.546 litres).

Cal­cu­lat­ing that dif­fer­en­tial with the cheap­est Syd­ney price, it means we’re pay­ing $1.45 ex­tra per gal­lon.

As a kid peo­ple used to shop around to find petrol a cent cheaper per gal­lon, so this oil com­pany ma­nip­u­la­tion, where mo­torists by and large are so wea­ried they just ex­pect to get ripped off, must make their share­hold­ers very happy in­deed.

Oil com­pa­nies don’t like his­tor­i­cal com­par­isons which demon­strate the lies of their var­i­ous claims.

In 2013 oil was around $110 A bar­rel and petrol $1.50 a litre, in 2015 oil was around $52 a bar­rel, less than half price, yet we were still pay­ing about $1.20 litre.

Over­lay­ing all this com­plex­ity, or rather “or­gan­ised murk­i­ness” en­gi­neered by the in­dus­try, is the is­sue of gov­ern­ment taxes and charges, but his­tor­i­cal data ex­poses the truth and shows that when oil is cheap, the bowser price doesn’t de­cline in com­par­i­son, the sums all go one way.

Just as the oil-rich mid­dle eastern na­tions hold the price at the high­est level they can with­out giv­ing too much in­cen­tive for in­dus­try to find vi­able al­ter­na­tives, so our gov­ern­ment won’t in­vest in new op­tions to cre­ate in­de­pen­dence from oil based fu­els, but in­stead muck around at the edges with un­vi­able op­tions such as first gen­er­a­tion ethanol feed­stocks.

Sci­ence writer and fu­tur­ist Ju­lian Cribb has cal­cu­lated that grow­ing just 600,000 hectares of al­gae could sup­ply all Aus­tralia’s fuel needs, as well as all the food we’d need for our­selves and the na­tion’s live­stock as well, yet there’s no fed­eral grants to try and make this bright and clean fu­ture hap­pen in any mean­ing­ful way.

We should have re­search and tri­als into grow­ing crops like mis­cant­hus gi­gan­tis, a gi­ant grass that needs no in­puts and re­plant­ing for up to 20 years, yet yields up top 6500 litres of ethanol per hectare, mean­ing they wouldn’t have to buy ex­pen­sive im­ported fuel, but could then sup­ply the do­mes­tic mar­ket.

These projects alone could trans­form re­gional Aus­tralia by trans­fer­ring the wealth we cur­rently squan­der in the mid­dle east to our own farm­ers who’ve been strug­gling for decades with crops that are marginally prof­itable at best.

In 2013 oil was around $110 A bar­rel and petrol $1.50 a litre, in 2015 oil was around $52 a bar­rel, less than half price, yet we were still pay­ing about $1.20 litre.

PHOTO: DUBBO WEEK­ENDER

An ex­am­ple of Petrol Prices in Dubbo this week.

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