Tuesday, August 08, 2006

Petrol Prices, Consumers & the Federal Government

Earlier this week, Prime Minister John Howard said he hoped petrol prices would return to about A$1.15 per litre.

Today the ABC ran a story about Mr Howard having to defend his
comment. A Labor Party MP claimed that this equates to about US$60 / barrel, when the current price is about US$70, and that the Federal Government's budget projection was around the US$70 mark. (This affects the calculations of how much GST is collected)

But is it the Federal Government's job to reduce bpowser petrol prices. Australia has long had a policy of international price parity, designed to reduce our consumption. Whether it does so is another question.

Motorists can reduce their spending on petrol by:
  • driving more carefully (slower rates of acceleration & deceleration)
  • reducing speed (about the only places where many city drivers DON'T speed is near speed cameras!
  • planning trips to reduce the number of times the car is taken out, traffic lights

It might be possible for people to reduce their pertol spending by 5%, almost negating the effect of the price increase.

In any case, it is really up to the consumer to reduce their spending on petrol, not for them to complain that "the government" shoud do something about reducing prices.

The Analyst