Fuel prices - The answer needs vision

Graeme Campbell

No other country in the world is more dependent on transport than our own. Why then is the present fuel price extortion allowed to continue? I doubt if any Government could get away with it if we had not been conditioned by the Green movement to believe that liquid hydrocarbon resources were finite, raising the spectre of running out of fuel and society grinding to a halt, and perhaps descending into anarchy.

In an absolute sense oil resources may be finite; however, for the foreseeable future, the more we look the more we will find. This is the case with all other minerals. The dire predictions of the Club of Rome were simply wrong.

Governments however have no interest in countering the nonsense of this Green rhetoric. The fear and uncertainty it engenders creates the ideal environment to burden us with more taxes, draconian legislation, and reduce our expectation of improved living standards. All this is done for our own good of course, and some people in positions of power actually believe this.

The claims and counter claims about petrol prices continue to frustrate an already bewildered public. OPEC blames the Government tax take and the Government blames OPEC for the high US dollar price per barrel. In Australia we get a double whammy because of the relative weakness of our dollar against the U.S. currency.

The truth is both governments and OPEC are to blame. Our own Federal Government takes 47.93 cents on every litre of petrol sold. Of this they remit about 9.1 cents to the States. Governments claim that they need the revenue to provide for all the facilities we demand. The Government's take is so large, and obviously has such a large impact on the price, that there has to be a better way.

There is of course a better way, but it requires vision. It is a very worrying situation when it is apparent that in terms of ability John Howard is the best that we have got in the Parliament. He is more a shopkeeper than a visionary.

In Queensland we have vast resources of shale oil. In terms of oil reserves they are far larger than our known liquid hydrocarbon reserves. The company, Southern Pacific Petroleum, is well on the way to perfecting the extraction process. If the Government was to decide that our domestic needs were to be progressively met from this resource, and they were to peg the price at eighteen dollars U.S. a barrel, and forgo their excise, we could have cheap fuel that would give us a real chance in the global economy. Because shale oil is labour intensive compared with oil wells it would generate a lot of jobs and would on its own recreate our forgotten expertise in engineering, creating many more quality jobs, and consequently generating more PAYE tax for the Government.

In addition we could commission the CSIRO to devise the optimal continuous ethyl alcohol process to produce fuel from grain and sugar. Such plants should be capable of being mothballed when commodity prices were good and quickly put in to production to provide a base price when world prices fell below grower viability. Up to 20% ethyl alcohol can be added to petrol without any adjustment to the engine being required.

The obvious question is how can such a scheme be implemented quickly to be of any benefit right now? The answer to that is simple. By drastically reducing the excise and making up the shortfall with a debit tax of about point one of a cent in the dollar on all financial transactions on the withdrawal side; this would be more equitable, less inflationary, and may help stop the totally unproductive and potentially damaging foreign exchange gambling industry.

October 2000

Articles by Graeme Campbell