Australia Has Cheap Fuel - Who Says So? - Shell

[Metal Head]

Despite the grumblings of motorists, oil giant Shell says Australia has some of the world's cheapest fuel. And the nation's peak consumer group, Choice, agrees - even as prices at the bowser jumped beyond $1.60 a litre this week.

Shell Australia's website says motorists are paying some of the world's lowest petrol prices as service stations reduce their retail margins to less than four cents a litre on discount days. ''... companies selling fuel at a very low margin are the reason Australia has among the cheapest petrol in the world, both before and after tax,'' Shell said. The oil giant says Australians have the world's fourth cheap fuel prices, behind Mexico, United States and Canada. The data, which dates back to March 2006, lists average Australian fuel prices at $1.30 a litre. Prices since then have jumped by more than 23 per cent to a record $1.60 a litre.

Choice spokesman Christopher Zinn said relatively low fuel excise by world standards was the reason Australians paid less for petrol than most other Western countries. "Although people hate to hear it, by international comparisons it's cheap and the rate of excise is lower than European countries,'' Mr Zinn said. Even if Australian fuel is cheap on a global level, consumers are advised to brace for dearer pump prices. "The only question is not how high it goes, but how long it takes to get there and how steep the rises are,'' Mr Zinn said. "Anyone who is buying a car, you'd think fuel economy will become a big factor". Crude oil prices jumped to a record $US135 a barrel this week, and Sydney and Adelaide motorists are paying an average of $1.58 a litre today, a slight reprieve from mid week prices above $1.60.

Drivers in Perth, Hobart and Brisbane were paying a little less than $1.50 a litre. Shell's website said petrol prices grew at a slower pace than inflation, electricity and vegetable prices in the 26 years to 2006. More recent data from the Australian Bureau of Statistics says petrol prices surged by 19 per cent in the 12 months to March 2008.

[Metal Head]

Further ways to cut the price of petrol at the bowser are under scrutiny after the Federal Government said it would look at revenues from petrol in its planned tax review. The tax review was announced in this month's Federal Budget, but ministers Jenny Macklin and Chris Bowen confirmed today the review also would investigate whether GST charged on top of the petrol excise should be scrapped.

The move comes amid continuing debate over high petrol prices and how much the government receives in revenue. Ms Macklin said issues such as the tax take on petrol had not been looked at in a long time. "That's one of the issues that we will address in this major tax inquiry that the treasurer announced," she told the Nine Network. "(Prime Minister Kevin Rudd) has announced the detail of the inquiry that will look at the issues that you've just outlined and a wide range of other critical matters that haven't been looked at for such a long time".

The opposition's problems over leader Brendan Nelson's promised five cents a litre cut in petrol excise continued with newspaper claims that its environment spokesman Greg Hunt had written to Dr Nelson before his formal Budget reply speech rejecting the idea. Leadership aspirant and opposition treasury spokesman Malcolm Turnbull also privately warned Dr Nelson against the policy via email before the speech.

Senior frontbencher Nick Minchin said the five-cent plan remained Liberal Party policy and Mr Hunt has never opposed the plan. "I spoke to Greg Hunt last night (and) he assures me that is not true," Senator Minchin said. "He supports this policy 100 per cent". Mr Hunt later released a statement saying he produced an options paper on ways to reduce the price of petrol. "The policy to cut the fuel excise by five cents per litre has my 100 per cent support," he said. "That is because it will achieve what Mr Rudd promised - but failed to do. "It will actually bring down petrol prices now and help to ease inflationary pressures".

Family First Senator Steve Fielding said the government was enjoying a $100 million petrol tax windfall because of skyrocketing petrol prices since the government was elected. "Average Melbourne petrol prices over the six months since Labor came to power have increased from $1.33 to $1.50," he said. "In recent years prime ministers, both Labor and coalition, have said they are concerned about the impact of high petrol prices but they cannot do anything about it. "That is rubbish. Mr Rudd has the opportunity to show he really understands the pain people are feeling at the bowser by sharing their pain and cutting the petrol tax".

[Metal Head]

Oil price 'a bubble waiting to burst'

Despite all the gloom, oil prices are predicted to fall 30 per cent within 12 months, giving motorists much-needed relief. Many economists argue that the present oil market is a bubble waiting to burst, much like the tech-stock boom in 2000. They say the price is being boosted by speculators, and point to a Persian Gulf chock-full of supertankers, chartered by oil-rich governments to hold fuel they cannot sell. Oil retreated slightly from its record high of $US135 a barrel last week and economists tip it will fall to around $US100 in six to 12 months. However, it may top $US150 before that happens. With the Australian dollar expected to reach parity with the US dollar by September, the currency will continue to provide a buffer against petrol getting much higher. "If we see pull-back in the oil price in the longer term, it's likely to be better news for motorists," CommSec equities economist Savanth Sebastian said. "There is speculation in financial markets, which is what's driving the price further upwards. The expectation is that it's unsustainable at these prices and should work its way back down". "We believe the long-term forecast for oil is below $US100 a barrel. We could see prices get down to $US80/$US90 a barrel". ANZ head of international economics Amy Auster said ANZ had forecast oil to fall to $US106 by the end of 2008. "It would be a pretty significant decline. From $US130 a barrel to $US100 a barrel is a 30 per cent decline," she said.

[bitingmidge]

And no one wants to face up to the fact that oil is a finite resource. Whether it's this year or next or the decade after next, it WILL run out.

If the government was fair dinkum it'd be putting fuel taxes UP and spending the money on proper infrastructure and planning for the day it does run out.

Let's say we've got 20 years. How long will it take to triple train lines and so on? 15?

Better start learning to ride your bike now I say!

cheers,

P

[Big Shed]

Down by the end of 2008? Depends which source you read, bit like global warming really!

Petrol price could rise for eight years

May 24, 2008 - 6:33AM

Petrol prices will keep rising for the next eight years, as analysts predict the cost of oil will continue to increase until 2016. The price of petrol is tipped to reach $1.70 at the bowser within the next fortnight and could hit $2 by the end of the year, Fairfax newspapers reported on Saturday.
Retailers are saying they will be forced to charge higher prices for groceries to cover increased transport costs.
An oil and commodities analyst at the National Australia Bank, Gerard Burg, has backed predictions that oil could reach $US200 a barrel.
It was unlikely the world would see a downturn in fuel prices in the near future, with futures trading in oil as far forward as 2016 still at a premium, he said.
© 2008 AAP

[Studley 2436]

Nah the back of the envelope says oil has shot up so much in such a short time it is just one of those bouts of irrational exuberance. It will come down and return to a price more in line with it long term trend at some time.

Any Oil Futures and the like you hold now I'd be selling this is the top or thereabouts.

Studley

[Colin Howkins]

It is true that Australia has relatively cheap fuel compared to a lot of of the countries - particularly those in Europe.

As mentioned in a previous thread, it has little to do with the price of oil - it has a lot to do with how much various governments rip out of motorists by way of excise, gst etc. It's just that the Australian government has not kept up with those other governments which charge more in excise and gst.

This, I believe has a lot to do with the size of Australia, and the amount of driving people do here. The average motorist in Australia does around 12000 km, whilst in the UK & Europe it is about half that. So politically it is dangerous for a government in this country to really up the ante on the amount of excise they put onto fuel, simple because of the amount we use and the impact that would have.....political suicide.

Having said that. All fuel in Australia is pegged to the "Singapore Parity Price." This came into being about 25 years ago, and basically, whatever oil is being traded for in Singapore it is deemed that all oil used in Ausrtalia be pegged to that price.

As it stands now oil is trading in Singapore for around $120-$130 US a barrel.

The question is how much is it costing to produce a barrel of oil in Australia. That is a bit difficult to say, but my bet is that it is not in the vicinity of $120-$130 US a barrel.

It is interesting to note that nearly all diesel used in Australia is made from Australian crude.

No one has had the courage to challenge the oil companies on this for [I am led to believe] when it has been raised in the past the oil companies have virtually said to just leave them alone or they would pull the pin on manufacture in Australia, and import from overseas.

How many people would that put out of work? Imagine the political repercussions of that.

What is also interseting is the proliferation of diesel powered cars from Europe........Why?

North Sea crude refines very easily into Diesel with low sulphur content. To further refine it to petrol would just add cost, so economically it was prudent to develop diesel cars. It had stuff all to do with the environment

Like all things in this world it revolves around two things, the almighty dollar and the politics behind it

So there is my spin

[Metal Head]

Thanks for that interesting post of yours Colin.

I just read that you can save up to

7% by washing your car
4% by having your tyres at the correct pressure(s)
5% by taking all unnecessary items out of the car (maybe the wife can catch the tram instead)
6% only half fill the tank more weight - more comsumption
5% don't brake too late, slowly ease it on
8% have the car serviced - tuned up

Well just a few small hints which will save you heaps at least 30% on your fuel bill .

HAPPY DRIVING
MH

[joe greiner]

Adding to MH's suggestions:

Use cruise control whenever possible and prudent, even at lower speeds. Direct pedal control makes for fluctuations in fuel consumption.

Shut down engine whenever possible, prudent, and legal. Re-starting most engines consumes about 10 seconds worth of consumption at highway speeds. Watch pedestrian signals; if "Walk" is indicated for crossing pedestrians, there's probably at least 10 seconds remaining until the crossing traffic gets "Caution" and then goes to red. At drawbridges and train crossings, probably a lot more than 10 seconds until you need to re-start.

Joe

[Durdge39]

Due to playing an online game with a lot of players from the rest of the world on it, I asked what some people in Europe pay for fuel. One bloke from Portugal says that they pay 1.43 Euros per liter of 95 octane fuel (premium unleaded to us). At current exchange rate (or at least what google returns) that equates to $2.35 per liter out here.

At least we aren't paying that much is all I can say.

Also, remembered that I asked the same question a while back aimed at those from the US... If I remember rightly, it equated to about $1AUD per liter of fuel for them, which makes us question our prices a tad.

[woodbe]

While we have just 2 companies controlling almost all the import and production of fuel in Australia, don't hope too much for the price to come down. Remember Qantas and Ansett?

Telling us that the price we pay at the pump is 'cheap' is just corporate spin. The refiners have the whole country over a barrel (excuse the pun) and the government does too well out of the excise to want to do anything about it.

Reality is we shouldn't be using as much petrol as we do in Australia. We have huge gas reserves:

From http://www.aph.gov.au/library/pubs/r...#_Toc187990340

Source: Australian Energy Regulator
Australia has large natural gas resources capable of sustaining our future production and exports well into and probably throughout the 21^st Century. As at 1 January 2005, Australia’s Category 1 and 2 reserves[4] totalled just over 4 000 billion cubic metres (bcm) or 144 trillion cubic feet (tcf).[5] Australia’s natural gas consumption for 2005–2006 amounted to 1 184PJ[6] (equivalent to around 1.12 tcf). Exports in that same year amounted to 12.495 million tonnes (Mt) of LNG [7] equivalent to 684.73 PJ.[8]

Gas is also more greenhouse friendly than either petroleum or coal, yet we export it by the shipload at peanut prices. Aren't we clever?




woodbe.

[joe greiner]

The exchange rate doesn't tell the whole story. Granted, US$4 per gallon equates to only US$1.06 per litre. But Australia has a different relationship of economic elements than US. A while back there was some belly-aching about the cost of things in Oz. Our benevolent dictator (Ubeaut) brought things back to Earth with some comparisons about salaries, housing costs, etc. Find one of his posts, right-click (whatever it is), and then "find all posts by ..." Worth a search.

Joe

[Fuzzie]

Due to playing an online game with a lot of players from the rest of the world on it, I asked what some people in Europe pay for fuel. One bloke from Portugal says that they pay 1.43 Euros per liter of 95 octane fuel (premium unleaded to us). At current exchange rate (or at least what google returns) that equates to $2.35 per liter out here.

At least we aren't paying that much is all I can say.

I just got home from Portugal last week. That 95 octane price is two weeks old. Prices there went up another 10 cents a litre last week as well. Also 95 seemed to be the standard octane rating in the EU it's not considered premium. Deisel is however cheaper than unleaded because I think the EU doesn't put as much excise on it because it doesn't cause as much bad pollutants.

[Big Shed]

Here is an interesting article on petrol pricing, it correctly identifies the major components of petrol pricing.

[Pheonix]

Best estimates that there is TEN years petrol left,somebody better do something or its back to the horse and cart