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Petrol ‘will go to $3 a litre’
Justin Lloyd, Daily Telegraph (Australia)
IT is a petrol company’s dream and every motorist’s worst nightmare – fuel prices soaring to more than $3 a litre.
As ridiculous and outrageous as it may seem, the country’s biggest petrol company says it will happen, and believes Australians should think themselves lucky they aren’t already paying more to fill up their tank.
The cover of the latest issue of Caltex’s magazine The Star features a cover predicting some time in the next decade when prices are 334.9c per litre.
… Mr King believes prices will soar over the next few years as crude oil supplies dwindle and governments introduce charges to combat climate change.
The cheapest petrol in Sydney yesterday – the cheapest day of the week – was 128.9c per litre at the United in Kogarah Bay.
Caltex believes higher crude oil costs, global refining capacity shortages, higher fuel quality standards and the introduction of carbon costs by the Government to address climate change will lead to further rises.
… Petrol prices in Australia are the fourth lowest of developed countries.
In 2006, Mexico, the USA and Canada were the only developed countries where petrol was cheaper.
Turkey, Norway, The Netherlands, Belgium and the UK were the highest, with prices the equivalent of more than 240c per litre.
(5 March 2008)
I think it is an error to call high prices a dream for oil companies. Profits are what are important, not gross income. -BA
Contributor Michael Lardelli writes:
Is Caltex in Australia talking oil depletion? “Mr King believes prices will soar over the next few years as crude oil supplies dwindle and governments introduce charges to combat climate change.”
Petrol at what price?
The Star (Caltex Australia in-house magazine)
Australia’s fuel prices today may represent a bargain, and it’s time for motorists and regulators to think carefully about the future.
Driving through Melbourne’s eastern suburbs on his way to work, Victorian lawyer Peter Mannion glances at his fuel gauge. Getting a bit low, he thinks. Soon he swings his European hatchback into the forecourt of a Caltex service station.
It’s Tuesday, a good day to fill up, when the weekly price cycle is typically at its lowest ebb. At the register inside the Star Mart Peter pays $70 for his 51.8 litres of Caltex Unleaded, an average of $1.35 a litre. Looking at the receipt, he shakes his head, reflecting that the same tankful cost him $10 less just a year ago.
Like most of the million other motorists buying fuel on any day of the week, Peter is unsure exactly what the $70 actually pays for. Of that sum, $26 goes to the federal government in tax, $36 pays for the crude oil from which the fuel is refined, $4 is for refining, $2 is for wholesale gross margins and $2 goes to the Caltex service station to cover costs and leave a slim profit. And while he is not happy about being charged $70, it may be a bargain. Not only is it substantially less than what he’d pay in most other industrialised countries, it could be a lot less than what he’ll pay in ten years’ time.
Inconvenient truths
The trend in petrol prices will almost certainly be upwards. This is not good news, but Caltex believes it’s a prospect that should be acknowledged by motorists, regulators and governments.
The pressure on price is likely to come from higher crude oil costs as demand increases ahead of supply, global refining capacity shortages, higher fuel quality standards and the introduction of carbon costs by government to help address climate change.
As dozens of inquiries and reports have shown, including the most recent ACCC enquiry into petrol prices, Australian petrol prices are not the result of collusion or “price gouging”. The market operates in a way that delivers prices as low as they can feasibly go. Petrol prices are the fourth lowest of developed countries.
While commentators and regulators focus on retail prices, the underlying reason for public concern is that the cost of crude oil has been skyrocketing. Ten years ago it was $US10 a barrel, recently it was over $US100. Singapore refinery product prices were higher still.
No one knows for sure where crude oil or refined product prices will be in future, but the way seems to be up. There is general agreement that to meet increasing demand conventional oil production will be supplemented by unconventional fuels like biofuels and gas to liquid fuel within the next 10 to 20 years, forcing up oil prices. Carbon pricing to help reduce greenhouse gas emissions will also increase fuel prices with government plans to start in 2010.
It’s not just about consumers
As the ACCC report released in December demonstrates, our key competition regulator is focused on the impact of fuel prices on consumers. Caltex has no problems with this narrow role of the ACCC, yet it should be acknowledged that the ACCC’s report is just one perspective on a complex, highly competitive industry. Factors like the environment, security of supply and the viability of the refining industry need to be considered.
Retaining a substantial oil refining capacity is essential to Australia’s future security. As Australia is a small economy spread over a vast area, petroleum refining and marketing will differ from large scale operations in North America or Europe but the industry will remain highly competitive.
These perspectives have shaped Caltex’s responses to the ACCC’s report as Caltex Managing Director and CEO Des King discusses in the next story.
(Feb-March 2008 issue)
Contributor Stuart McCarthy writes:
The contents of this article featured in network television news (news.ninemsn.com.au/article.aspx?id=387540) and Murdoch print media (www.news.com.au/dailytelegraph/story/0,22049,23320041-5001021,00.html)
$3 petrol prediction a ‘scare tactic’
AAP, The Age
A prediction by Caltex that motorists could be paying more than $3 a litre for petrol within 10 years is an attempt to soften up consumers, Australia’s peak motoring group says.
The cover of Caltex magazine The Star predicts prices on service station noticeboards could soar to 334.9 cents within the next decade.
… But the prediction drew an angry response from NRMA president Alan Evans, who said it was nothing more than an attempt to soften up drivers for future price rises.
“There is no way in today’s dollar terms that petrol should be $3 in a decade’s time,” Mr Evans said.
“They are trying to provide ready-made excuses for when they try and raise prices in the future.”
Caltex corporate affairs manager Richard Beattie defended the magazine’s prediction, saying “it wasn’t intended to be a concrete prediction”.
“We used it as a futuristic way of getting attention to a whole range of issues,” Mr Beattie said.
(5 March 2008)
Contributor SP writes:
I wonder if NRMA members reading this are happy with the quality leadership their fees are getting?!
