Issue

Petrol prices

Petrol prices seem to be increasing every year. However, recently the rise in the cost of petrol has been extreme! As petrol prices continue to soar one big question is lingering in the minds of Australian drivers—to drive or not to drive?

Submitted 10/11/2005 By carmel Views 319488 Comments 30 Updated 13/08/2008


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Petrol prices seem to be increasing every year. However, recently the rise in the cost of petrol has been extreme! As petrol prices continue to soar one big question is lingering in the minds of Australian drivers—to drive or not to drive?

What is the issue?

These days it is becoming incredibly expensive to drive your car and high petrol prices are having an increasing influence on people living in Australia. These include:

  • A reduction in consumer spending—the more money spent on petrol, the less money spent at the shops on non-essential items.
  • An increase in car owners converting their cars to use gas instead of petrol.
  • The sale of ‘Big’ cars such as 4WDs has declined and the sale of ‘small’, more economical cars has increased.
  • amount of people taking driving holidays has declined which is affecting Australia’s tourism industry. It is becoming too expensive to take a road trip interstate and with the current trend of low airfare prices, flying interstate is often a cheaper option.
  • Higher taxi fares.
  • More people living in Australia are reducing the use of their cars to try and save money opting to walk, ride a pushbike or make use of public transport.
  • Many Australian’s can’t afford to keep re-fuelling their cars and are consequently deciding to sell them.
  • Some motorists have refused to pay for petrol resulting in petrol station crimes such as driving off without paying for fuel.
  • Interest rates have been put on hold by the Reserve Bank of Australia to take some financial pressure of homebuyers.
  • The idea of increasing the amount of ethanol blended with petrol has been put forward to the Government.

Who does it affect?

Rising petrol prices are having an impact on everyone living in Australia, particularly those who rely on their car everyday. Public transport is not always an available alternative (particularly for people living in regional or rural parts of Australia), and many Australians such as taxi drivers and truck drivers make a living out of driving their vehicles.

The cost of petrol could also reduce the amount of young drivers. Learning to drive may become a low priority for many young people, given the high cost of running a car today.

Why is it happening?

  • Oil companies increasing their refined petrol prices.
  • World market petrol pricing—Australian petrol refiners set their prices based on the world market prices.
  • Increased government tax on petrol since the 1980s.
  • The impact of Hurricane Katrina has caused worldwide shortages of petrol due to the disruption of oil production in the Gulf of Mexico.
  • China’s restrictions on refined petrol exports.

How do I know this?

ABC News Online, http://search.abc.net.au/search/search.cgi?query=%...

Australian Competition and Consumer Commission, Petrol, http://www.accc.gov.au/content/index.phtml/itemId/11938

Shell Australia, Price Trends, http://www.shell.com/home/Framework?siteId=au-en&F...

Sydney Morning Herald, http://search.smh.com.au/siteSearch.ac?q=%22petrol...

Discuss Now

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kjalexander 30-Jun-2008

I think the soaring price of petrol has highlighted how scarily dependent Australia (and most of the developed world) is on a non-renewable resource. The rising cost of oil has clearly had a negative impact on several key industries and affected people right around the country. As the price continues to increase, as it inevitably will, things are only going to get worse.

Although paying less at the pump would obviously be great for our wallets, money is obscuring the real issue here: our current lifestyle is completely unsustainable. Rather than focusing purely on the cost, I think we should be searching for a sustainable and environmentally friendly alternative to the petrol guzzling ways of present.

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Yuilden 06-Apr-2008

On why it is happening - the article can include

Geopolitical issues.
Terrorism is one, but the other thing is socialization of reserves. The oil companies have only 10% of the reserves as opposed to nationalized companies.

chronic industry underfunding - ie when prices were low no inducement to find reserves, now the oil companies are playing catchup. Theres a world oil rig shortage and capable people of running it.

Resource depletion - alot of older fields are drying up. North Sea for instance the output is dropping by something like 7%, Cantrell is going to be a basket case in a few years.

Reduced ROIE - Return on investment over energy. The easy stuff is mostly gone - more difficult things like deep sea or oil shale dont give anywhere near the return of sweet crude of a 'gusher' (your classic oil film pouring out of the ground without pressure).

Market speculation.

China’s restrictions on refined petrol exports - thats just plain wrong, China is a net importer, it's all used domestically.

On affects - you couldve included consumer items - 96% of them (at least) are married to oil.

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Yuilden 06-Apr-2008

PerthSuperNova.

Easy explanation on the price disparity - what is petrol bought with?

The petrodollar.
Reason US $ is the reserve currency is because it is what is used to buy the oil. Any other country wanting to buy oil first has to get US $, which is why the large fear in middle east countries wanting to do business in Euros. Having this ability gives great control on what you can charge for it.

Ripped off? Hmmmn well what about the Iraqi's under Saddam they were paying 35 cents per litre - the IMF came in and said no you have to pay market rates, currently theyre paying around $1.35 - theyre flush with oil and have nothing else but they should damn well pay the same as the rest of the world...Huh.

Petrol is cheap.
How much would you charge for pushing a one tonne vechile even 20km, i bet more than a couple of dollars. One day (soon) we'll realize how undervalued/squandered our fossil fuel heritage was. Already market watch has said a 'super spike' of over $200 dollars US is possible for oil - thats not based on geologic constraints but geopolitical ones -> Saudi gets bombed or Nigeria falls further into strife.

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perthsupernova 16-Mar-2008

There are a few good comments here, but I am surprised that the issue seems to be focused on us (as consumers) doing our part to reduce our use (which, by the way, is a great suggestion), but none address the point that we are getting blatantly ripped off by "someone". Let me put it into perspective. Here in Australia we are currently paying an average of $1.30 per Litre (plus or minus) while in the U.S consumers pay an average of $1.30 per Gallon (1 Gallon = approx. 4 Litres) Last time I checked The Aussie dollar and the U.S. dollar are near on the same (only 8 to 10 cents difference). Which means we pay approx. $5.20 per Gallon Which brings me to my question: Why do we pay 4 times as much for the same thing? Why is this huge difference not addressed in the media, or brought to the attention of the average Aussie? Is there a way to make these facts public so that more Australians can see that something real fishy is going on. Yes, we need to reduce our use, but we also need to call the industry and our government out and ask them to justify this incredible price difference.

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Secret 14-Jan-2008

Telling people that they should use public transport is all very well for anyone who lives in the metro areas. However, I live in the country and quite a way from town, where I work every day. There is no way I can get to work unless I drive my car.
The petrol prices are killing my bank account - and we all know that the price of petrol is higher here in the country than in the city. So if there is anything we can do to help lower the ridiculous and insane price of something that is NEEDED here where I live, then I'm all for it.

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