Enabling change in our Society, Environment and Economy (SEE)

Oil Prices

The Problem/What Controls Petrol Pricing?

There are three main components of the cost of fuel at the petrol station.

  1. Product cost (driven by costs of crude oil, refining etc.) (50-60 % of total cost).
  2. Tax (Government fuel excise tax, Goods and Services Tax) (30-35 %).
  3. Other costs (oil company and retailer costs) (5-10%).

The main influences on the overall movements of domestic petrol prices are (ACCC):

  • changes in the international price for refined petrol, and
  • movements in the Australian/US dollar exchange rate (because refined oil is expressed in US dollars).

It is important to recognise that Australian petrol prices are amongst the lowest in the OECD countries. Part of this is due to the high competition for amongst petrol providing companies, and more broadly, within the Asian market.

What’s Increasing Prices of Crude Oil Product?

There are many influences on the price of crude oil. These include rising demand for oil (especially from developing countries like China) and conflict in oil producing regions such as the Middle East.

In the near future Peak Oil may cause even greater rises in petrol prices. Peak Oil is the time when extraction and production of oil peaks worldwide. This means our ability to extract oil is overtaken by our demand for oil. Once we reach peak oil, extractors will no longer be able to keep up with increasing or even steady demand. Peak oil has been estimated to occur within the next 20 years.

Peak Oil means not ‘running out of oil’, but ‘running out of cheap oil’

What Can We Do About It?

The simplest way to avoid the problems of rising petrol prices/Peak Oil is to reduce our reliance on oil as an energy source. Oil is not only an energy source for almost all our transport but it is also heavily used in industry. The following are some options for the future:

  • Increased utilisation of hybrid vehicles and other transport options that are more efficient and use less petrol.
  • Increased use of public transport.
  • If we turn to using renewable energy supplies (such as solar, wind, hydro, wave, geothermal) to power our transport and factories then our use of oil products will diminish and we will not have to worry about the price of petrol.

The more quickly we implement large scale use of renewable energy supplies (ie. before peak oil occurs) the less strain it will have on the economy in the long term.

The best way for change to happen more quickly is to let our local political representative know that we are concerned.

What can SEE-Change Centres do to help?

This is a tough problem that we all own and must all share. That means all Australians must understand the problem and the ways it can be solved and must share with our politicians in the difficult choices that lie ahead. The task in SEE-Change Centres is to involve local communities in understanding what the options facing us all mean, and to help us all to decide how we want to proceed as individuals, as a community and as a nation.

Possible SEE-Change Centre Activities on this topic

  1. Suburban “town meetings” at which experts debate the options.
  2. Practical commercial demonstrations of ways we can all lower our domestic use of energy.
  3. House meetings to discuss Flannery’s book or ways of modifying homes
  4. Public meetings with elected representatives to explore the relative merits of differing legislative approaches.
  5. Participation with local schools in project work, art competitions, debates and provision of websites and other resources
  6. With the assistance of local high school children, collection of local data about the energy efficiency of homes and businesses in the area and the greenhouse gas emissions known to be generated by the neighbourhood,
  7. Distribution of a regular neighbourhood “greenhouse bulletin” as part of the “neighbourhood watch.”
  8. Measuring the carbon emissions of our household and our suburb to see if what we are doing personally approaches our personal ‘share’ in the scheme of things.
  9. Developing a reference collection that people in the area can consult on the technical aspects and complexities of the causes and impacts of climate change.
  10. Meetings of informed citizens with politicians to discuss ways in which Australia could play a more appropriate role at the global level

Further Reading: The weather makers:The history and future impact of climate change Tim Flannery Text Publishing 2005

Australian Competition and Consumer Commission (ACCC): More information about fuel pricing

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