Only higher prices will cure fuel addiction


Petrol bowserBoth the Federal Government and Opposition have proposed easing the pain of ballooning petrol prices with flat tax reductions. The Prime Minister favours a cut in GST on petrol, while the Opposition leader wants a five cent reduction in excise.

However they would be doing us more of a favour if they treated oil dependency as an addiction, and actually imposed extra taxes that would further increase the price of petrol. This is the logic behind the Government's strategy to reduce the cost to community health and wellbeing of other addictions and social ills such as tobacco and binge drinking.

Oil usage at current levels is unsustainable. We all depend upon oil to maintain our lifestyle, but supplies are finite, and greenhouse emissions caused by motor vehicle use are a major contributor to climate change on a calamitous scale. We need to make radical changes at all levels, from personal to global.

The energy crisis of the '70s shocked us into action. Substantially increased petrol prices precipitated greater fuel economy in the manufacture of cars. But the oil giants eventually dropped prices and we resumed our bad habits.

Outspoken Melbourne university transport planner Paul Mees is a lone voice in his advocacy of increased petrol prices. He told ABC Radio that motorists complaining about high prices are forgetting that fuel would soon have had to cost more anyway, to address the problem of climate change.

'The whole point of an emissions trading scheme is to make things that produce a lot of greenhouse emissions more expensive and since 20 per cent of our emissions come from transport that inevitably was going to meant that petrol prices would go up.'

It's obvious that the Federal Government would need to direct revenue from any increased petrol excise into subsidies for those in business and geographical situations which require motor vehicle use at or near current levels.

A policy update issued last week by The Climate Institute suggests higher prices do in fact lead to greater fuel efficiency. It points out that fuel taxes are about eight times higher in the UK than in the USA, and that this results in substantially lower average per capita fuel expenditure.

The Institute argues that Australian moves to reduce petrol excise would 'lock in choices based on expectations of lower prices', and actually make communities 'more — not less — vulnerable to future increases in world fuel prices, as well as encouraging increased greenhouse emissions'.

Meanwhile Federal Cabinet leaks during the past week have exposed the Fuelwatch scheme as a con. It seems the majority expert opinion points to it providing no petrol price relief. It may even increase the price at the bowser. If that's true, those committed to fighting Australia's fuel addiction with higher prices could view Fuelwatch as a move in the right direction.

Michael MullinsMichael Mullins is editor of Eureka Street. He also teaches in the Media and Communications Department at the University of Sydney.

Flickr image by semola1

Topic tags: Michael Mullins, Fuelwatch, petrol prices, fuel addiction, climate change, peak oil, Paul Mees



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Existing comments

It's time the Government imposed quotas on petrol driven cars manufactured here, or imported. Why does one need to pay for a LPG conversion for a new car when it should come off the assembly line, or importers 'line' in that option, or diesel, or natural gas etc.
John Watherston | 02 June 2008

good to hear that someone is saying keep the petrol prices up. We do have to learn to rely on petrol less and cost certainly makes us do that.
Fiona Ryan | 02 June 2008

Spot on, Michael. Only thing I would add is that all tax on petrol should be spent on public transport improvements. Integral to the reduction in demand for petrol is the provision of good alternatives.
Colin Long | 02 June 2008

I believe Michael Mullins is taking the long view of fuel consumption and energy use. However, as someone living in regional NSW, which is unhappily devoid of footpaths, cycle paths and public transport, apart from inter-city trains and buses, and is 17 km away from a business centre, his view is anti-pathetic to the concerns of people in this and similar areas. When will journalists realise that there is more to Australia than the big cities? With inadequate trans-suburban transport corridors, most of us are really stuck for alternatives.
Annette Walker | 02 June 2008

Congratulations Michael Mullins for this sane article on petrol prices. When I think of the challenges that lie ahead of us in dealing with climate change and then see the ridiculous debate in the past week between Kevin Rudd and Brendan Nelson on petrol prices, I see no inkling of any leadership on those challenges. I am not against Fuel Watch, but it will make no difference. And as to giving everyone, including the well-off, a 5 cent a litre discount across the board, what could be more ridiculous. Why can't we have political leadership which tells people the truth, and helps the nation address the changes that need to be made?
Harry Herbert | 02 June 2008

Petrol and oil for cars is only one by-product of the petro-chemical industry. We rely on oil for other lifestyle products - plastics, polymer paints, computers, mobile phones, fertilisers and nylon all have oil based components. Not only do we have to cut down on petrol for our cars etc., but our lifestyle of consumerism for technologies that are oil based.
Lawrie O'Dwyer | 02 June 2008

FuelWatch does help people save money. I just checked ULP prices. My local, East Perth, BP station is charging 157.5 cents per litre. A kilometre away I can pay 152.5 cents at a United station. I am about to drive South of the River and will go near two Gull stations which charge 151.9 cents.
Today's Metro average price is 156.3 cents. Last week, among the average prices, Caltex Woolworths charged 152.3 cents, Peak 152.9 and BP 158.1.
FuelWatch is no con. Unfortunately, those who do not receive its benefits have been asking the wrong questions about it.
Gerry Costigan | 02 June 2008

Firstly, all of the recent research on climate change indicates that human actitity, including driving cars, is not a major contributor to this change. Which change anyway may be cooling rather than warming. And "emmissions trading" is now showing all of the characteristics of the Y2K bug - and may well go the same way.

Secondly, it is naive to believe that fuel consumption in the UK is lower than in the US simply because the price, and taxes, are higher there.

Thirdly, if the price of fuel goes up, all of the big users, transporting goods for instance will simply pass the cost on - and so food and other commodity prices go up, wage demands go up, inflation goes up.
John R. Sabine | 02 June 2008

Thanks, Michael. I suggest that peak oil price effects are inexorably driving up the price of petrol, anyway. In 12 months it will be $2 a litre, in 24 months it will be $2.50 or $3.00 a litre - because the price is increasing exponentially as the market sees that oil is drying up.

The challenge to govt is not to tax oil more - the market will do that all too quickly - but to move even more quickly to build and instal oil-saving technology and adequate public transport infrastructure into our economy - the longer we delay this, the more costly and harder it will be to do, e.g. wind turbines for power generation went up in cost 30% in the past three years - and to do some real educating of we, the public, as to why all this is happening.

The fuel excise stoush this past week was utterly counter-productive in that regard, and a disgrace to both major parties' leaderships and their so-called economic advisers. The only politician who spoke sense to the public was Senator Milne.
tony kevin | 02 June 2008

I agree with Annette Walker, from regional Australia. It is all very well for commentators to say 'yeah, keep up the prices as this will reduce our addiction to this type of fuel' - but they are responding from a 'city-centric' paradigm. Please examine what it is like for rural/ regional australia with little or no public transport, yet with distances beyond walking/ cycling distances. Please try to understand the difficulties of rural/ regional australia better!
Cindy James | 09 June 2008

We will not escape the "oil crisis" while there are no liquid fuel alternatives to those derived from petroleum. Vegetable oils might offer some relief, but a R&D effort comparable to the Manhattan Project is needed to develop liquid fuels from renewable sources. No governments seem to appreciate the magnitude of the calamity which is approaching.
Owen Holmwood | 01 July 2008


I couldn't agree more. Unfortunately there are too many of us driving ego machines like Hummers and V8's because we can afford it.

You won't persuade these people with green talk. Money and appearnace are what they worship.

The coalition are banking on these same people giving them the their vote.

They are putting short term politics ahead of long term social and environmental vision.

Thanks for your sensible contribution to the debate.
david akenson | 15 July 2008


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