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Thread: More on the fuel debate

  1. #1
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    More on the fuel debate

    I just received the following. It puts a different slant on the whole fuel issue and is worth a read, notwithstanding the odd spelling and typo ... sorry Ron ..


    Fuel: The Mass Debate Or How to Knock About 50c a Litre Off the Price Of Fuel First and foremost this debate should be centred on Diesel NOT Unleaded. Why? You may ask. Just look at the increase in supermarket prices for your answer. While it may cost you $5 or $10 extra to fill your tank everything that is transported (which is everything) rises as Diesel rises. My average basket at the supermarket per week has increased on average $30 and that’s for one person. Australia’s whole economy is tied to Diesel and therefore it should be afforded the same priority and status as water i.e. an essential commodity. I own a small transport company and I have had to significantly raise my prices twice in the past year just to maintain profit margins. This cost you money too. I am compelled to write this letter because I am sick of all the namby-pamby pussyfooting around everyone seems to be doing about the current fuel debate. I have spent considerable time researching this area because it affects my income. Contained herein is the WHOLE truth about the debate, the WHOLE big picture, if you will. NO-ONE till now has had the testicular fortitude to stick their necks out and present the WHOLE argument about just how much we are being RIPPED OFF. If you want the truth and the WHOLE truth read on. DON’T – Listen to spin doctors from the oil companies. THEY HAVE A VESTED INTREST TO KEEP FUEL PRICES HIGH. DON’T – Listen to the government – state or federal. THEY HAVE A VESTED INTREST TO KEEP FUEL PRICES HIGH. DON’T – pay too much attention to news or current affairs programs. THEY HAVE THEIR OWN AGENDAS. So here we go, how to make fuel cheaper! FIRSTLY – DISBAND FUEL PARITY Parity, for those that don’t know, is government sanctioned price fixing (simple as that). Parity allows fuel companies to sell their products for the highest current price they find in the Asia Pacific region. It completely disregards supply and demand economics and eliminates any need for competition amongst themselves. Don’t believe me? Just look at the price of Diesel. If you remember growing up when Diesel was always 10-15c p/l cheaper than Petrol you might understand this more. How can a product that costs far less to produce (partially a by-product of producing Unleaded as well) and a product that Australia uses more of than any other fuel be MORE EXPENSIVE than Unleaded? Simple, ring Singapore, where they don’t use a lot of Diesel and import all their fuel, find out how much it’s selling for there and charge the same here – sound fair? NOT!
    Any other industry who tried this one would be hauled of to the High Court quick smart and prosecuted for price fixing! Oh but hang on, our government ALLOWS them to do this NUMBER TWO – BARRELL PRICE That price the news loves to show us each night is the PREMIUM GRADE crude oil price. Australian oil companies DO NOT buy PREMIUM GRADE crude oil! In fact Australia produces around 70% of its own oil and imports about 30%. The cost of production per litre produced here is cheaper than that of imported fuel, but in no way is this factored into the pump price, because they don’t need to (SEE PARITY ABOVE) we pay a pump price based on PREMIUM GRADE crude oil price the same as if we imported all of it, say somewhere like Singapore! Starting to get the picture? NUMBER THREE – LEVIES Everyone knows that both State and Federal Governments take a large slice of the cost of a litre of fuel. This equates in total to about 46% of the price per litre. This money is used for infrastructure, road trauma etc. etc. so fair enough right? WRONG! What is wrong is that it is a PERCENATGE! Look at this. If a litre of fuel costs $1.00 then the Government gets 46c p/l, right? A week later fuel rises to $1.10 p/l; the Government gets 50.6c p/l, bingo! Something tells me that in one week, their costs, IN NO WAY have gone up 9%! As I stated previously – THE GOVERNMENT HAS A VESTED INTREST TO KEEP FUEL PRICES HIGH. THEY MAKE LOTS MORE FREE MONEY! Why else do they allow fuel companies to maintain PARITY? If they changed the tax (sorry, levy) to a flat rate tied to the GDP then the fuel price would drop drastically and immediately! NUMBER FOUR – GST - THE DOUBLE DIPP Now this one is outright “THIEVERY” and also applies to cigarettes and alcohol. GST = Goods and Services Tax, correct? 46% or 46c in every dollar in the price of a litre of fuel is TAX (sorry; again, LEVY). What part of LEVY is a good or a service? YOU CANNOT TAX, TAX RIGHT? WRONG! You do the math. Say fuel costs $1.00 p/l – the GST component = 9c But hang on a minute 46% or 46c of this is TAX! i.e., 4.14c of the GST is ILLEGALLY CHARGED ON THE TAX COMPONENT! Not much you say? FOR EVERY LITRE SOLD IN AUSTRALIA EVERY DAY! That equates to millions of free dollars for the Government! I’ll say it one more time - THE GOVERNMENT HAS A VESTED INTREST TO KEEP FUEL PRICES HIGH. THEY MAKE LOTS MORE FREE MONEY!
    The GST on fuel should be 5.4% not 10%. At $1.75 p/l this would drop the current price by around 8c p/l. Feeling a little annoyed? You should be! Even without disbanding parity and introducing real competition among fuel companies, you should be paying about 40c less per litre! My name is Graeme Strempel, (gusto1@arach.net.au) and I run a small transport business, I happily welcome anyone, Government and fuel companies included to prove me wrong. If you feel strongly about this issue then pass this missive on to everyone in your address book. Eventually someone might take notice.

  2. #2
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    I think that some of the facts are wrong, the federal excise on fuel is fixed and expressed in dollars per litre (or in fact part dollars per litre) to 5 decimal places see Petrol and Diesel Excises (Research Paper 6 2000-01) so the value of excise is unchanged by the cost of crude oil. Previously the excise was increased alongside the CPI but this no longer the case.

    What does increase as the price of crude rises is the GST collected. Only a small part of the GST collected is the GST on the Fuel Excise and is why the various Government spokespeople were only discussing reductions in the order of 8 cents/litre. GST is essentially a federally collected State Tax.

    Why is diesel more expensive, because the excise on diesel is higher than the excise on petrol. Why diesel, because trucks mostly use diesel and the damage they do to roads is greater. For smaller diesel powered vehicles the excise difference actually means that the excise tax/kilometre between small diesels vehicles and small petrol vehicles is similar.

    For rural and regional diesel users there is the Diesel Rebate Scheme for vehicles over 4.5 tonnes and for on farm use there is a similar rebate.

    The current cost of fuel remains with the volatility of futures markets with the gambler philospohies of the traders and the greed of the oil companies. It has very little to do with the growth of the Chinese and Indian markets because if that were the case the price would have been skyrocketing over the last 20 and not just the last 5 years.

    What happened in the last 5 years, hmmm???? The Oil Man G W Bush had to have a war in Iraq.

    My opionion

    Diana

    You won't find me on: faceplant; Scipe; Infragam; LumpedIn; ShapCnat or Twitting. I'm just not that interesting.

  3. #3
    Treads Guest
    Quote Originally Posted by Lotz-A-Landies View Post
    What happened in the last 5 years, hmmm???? The Oil Man G W Bush had to have a war in Iraq.

    My opionion
    Yep, 'cause it was all about the oil

  4. #4
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    Whilst I agree with the message we need to get our facts right.
    Quote:
    Australian oil companies DO NOT buy PREMIUM GRADE crude oil! In fact Australia produces around 70% of its own oil and imports about 30%

    The latest figures are that Australia can only use 50% of local crude for petroleum production and has to import the shortfall.
    So whilst the above is half close to correct, it is totally misleading in its context as it infers that Australia produces 70% of its fuel requirements.
    See attached, -2005 figures coz I cant be bothered to look closer- but you get the trend.

    1301.0 - Year Book Australia, 2008

  5. #5
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    Quote Originally Posted by Lotz-A-Landies View Post
    I think that some of the facts are wrong, the federal excise on fuel is fixed and expressed in dollars per litre ....
    Why is diesel more expensive, because the excise on diesel is higher than the excise on petrol.

    For rural and regional diesel users there is the Diesel Rebate Scheme for vehicles over 4.5 tonnes and for on farm use there is a similar rebate.

    My opionion

    Diana
    The excise on both petrol and diesel was fixed in 2006 (ie: no longer indexed for CPI increases) at $.38143.

    The Diesel Rebate Scheme is not just limited to rural and regional operators, or limited to farms. It is available to ANY ABN holder using a diesel vehicle of GVM greater than 4.5t on a public road. From this, you can see that businesses are not eligible for the full amount back, while farmers only get the full rebate for their machinery if they ALSO operate a truck on public roads!?!

  6. #6
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    Quote Originally Posted by Rosco View Post
    Fuel: If you want the truth and the WHOLE truth read on. How can a product that costs far less to produce (partially a by-product of producing Unleaded as well) and a product that Australia uses more of than any other fuel be MORE EXPENSIVE than Unleaded? Simple,....
    Production costs of Ultra Low Sulphur Diesel is much higher than the older spec fuel with higher sulphur limits. Refineries have virtually had to be redesigned, and do not have the same capacity as before. In the US, this has had a significant impact on the supply side of the diesel market, and even with the higher prices, many refineries are not recouping their costs and considering closing.

  7. #7
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    In the interests of fair play, I dropped the gentleman named in the article a quick email, advising him I had posted his thoughts here and welcomed him to drop in to comment on any responses. I rec'd a delivery response, but no read response as yet. At least the address is kosher.

    It will be interesting to see his response to some/all of the above.

    Cheers

  8. #8
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    solmanic is offline One Merc post away from being banned...
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    Quote Originally Posted by DeeJay View Post
    Whilst I agree with the message we need to get our facts right.
    Quote:
    Australian oil companies DO NOT buy PREMIUM GRADE crude oil! In fact Australia produces around 70% of its own oil and imports about 30%

    The latest figures are that Australia can only use 50% of local crude for petroleum production and has to import the shortfall.
    So whilst the above is half close to correct, it is totally misleading in its context as it infers that Australia produces 70% of its fuel requirements.
    See attached, -2005 figures coz I cant be bothered to look closer- but you get the trend.

    1301.0 - Year Book Australia, 2008
    Correct me if I'm wrong, but that statistics page doesn't give any indication of what percentage of oil Australia imports vs domestic production for domestic use. It only refers to oil exports and imports.

    Quote Originally Posted by Rosco View Post
    FIRSTLY – DISBAND FUEL PARITY
    I've said this in another thread, but I'll repeat it here. We can't abandon parity pricing and lower the price of oil locally. If we do then ALL our locally produced oil will simply be exported to countries where it attracts a higher price and we will be left to import the shortfall - at world market rates (so no nett benefit). We would need to nationalise our local oil production to force the oil to stay here.

  9. #9
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    I was under the impression that Australian oil wasn't suitable for diesel production because it was too light.
    Cheers
    Slunnie


    ~ Discovery II Td5 ~ Discovery 3dr V8 ~ Series IIa 6cyl ute ~ Series II V8 ute ~

  10. #10
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    Actually, you have left out a couple of taxes - State and federal royalties on production plus Resource Rent Tax on offshore production, plus fees and charges too numerous to mention on every aspect of production, distribution and refining.
    Just at a local level, I was talking to the fuel agent in the local village about what is involved in running his truck to deliver fuel to properties round here. I don't remember the details, but I know that I was staggered by the amount of red tape, inspections, safety courses, demands for new equipment etc, to the extent that I could not imagine why anyone would take it on. (His whole business, Shop, service station, fuel, fertiliser, stock & station agency etc is on the market as he wants to retire - I suspect the fuel business is why he is having trouble selling it. It is a lot worse than agricultural chemicals apparently).

    It is possible to refine diesel from any oil base - but the Australian refineries are almost all very old (designed and built before Australian crude was available), and were designed to work on middle eastern crude, and can only refine mostly petrol and kerosine (jet fuel) from typical Australian crudes without major investment - and importing the heavier feedstock is easier. This may have changed a bit with the requirement to produce ultra low sulphur diesel, meaning that the diesel line needed to be completely redesigned anyway.

    John
    John

    JDNSW
    1986 110 County 3.9 diesel
    1970 2a 109 2.25 petrol

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