How Australia can reduce the price of petrol
Posted by MattE on 17 Jun 2008 at 10:26 am | Tagged as: Communications
The rising price of petrol is hurting. It is hurting a lot. This is evidenced by the average speed of motorists – they are driving more slowly in an effort to conserve fuel. People are also driving off at petrol stations without paying.
The Labor Government has had a tinker around the edges with possible ways to reign in the price of petrol.
The National Fuel Watch Scheme may or may not work. It does not work for Shell Australia who publishes their fuel prices on their website every day for branded Shell outlets. But I know that there is one Shell outlet in my city that runs its own pricing policy.
And the halving of the GST – the tax on the existing Excise tax – which will make about a 1.5-2c per litre difference. I can hardly wait…..
But why not look at the Excise itself.
Lets look at the current breakdown of what makes up the price of petrol (image via Fuelwatch WA):
We see here that Excise accounts for 39% of the price.
My suggestion is to make this tax a fixed amount, rather than a percentage.
This fixed amount can be retrospectively calculated at say $1.20 per litre.
This would provide a fixed revenue stream of 46 cents per litre to the government.
With petrol at around $1.50 currently, this means that petrol could effectively fall instantly by 12 cents per litre to $1.38.
Next let’s also accept the 50% reduction of the GST for the total amount of the price per litre (not just the excise amount) to 4.5%
This will take another 6.2 cents per litre off the price of petrol bringing the price to $1.32 (or just 2 cents per litre if on the excise only).
By fixing the Excise amount, the government still has a fixed amount of income that can be budgeted against.
The increase in fuel costs is a spiral into inflation.
We saw how a cyclone affected banana prices which saw a rise in interest rates from that one commodity.
What will be the interest rate effect from increased fuel, increased food (production/transport input costs) prices in the next few months.
Comments are welcome.
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Mate, you sure have worked through this one step by step… pity polititians are missing the logical part of their brain that would allow them to do this
I’d like to know the governments no bullshit response to this post.
Hey MattE, isn’t the excise already fixed at about 39 cents a litre?
The price of energy, in particular fossil fuel, is historically high and seems set to increase.Fuel bills – whether for the home or for the car – take up an ever-increasing proportion of people’s budgets.
Anthony – I’m no expert, but as far as I know it is a percentage amount. I’m sure that when petrol was only 90 cents a litre (not that long ago) that it was not a higher proportion.
Can anyone provide a definitive input??