Fuel prices

Here's an email I got a while back, thought I would dig it up and post it to provoke some conversation. The writer runs a small transport company.

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!

cont.

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 DIP

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, ([email protected]) 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.

The government's on a good run here.

If they didn't get as much in taxes/levies each week from fuel/oil, they'd have to tax something else. Maybe put a tax on limp vegetables. This, naturally would require the employ of a young blonde at every fruito in the country to make sure the cucumbers all stood up straight and then there'd be a lot more healthy people of both genders making sure they had an apple (or ten) a day. But I digress.

Taxing fuel is a winner for them. People either *have* to, or *want* to drive. If they didn't - and there are some that do this - they'd walk or ride a bicycle to work (guilty). It doesn't matter if fuel costs a little more here or there, the difference is negligble for the journey travelled and let's face it, if you save 4c per litre you've only really saved a couple of dollars per tank.

I'd love to save 40c per litre, but not at the cost of missing out on my greens.

Stories like this have been going around for a while now and most of them paint a similar picture. Sure we are getting ripped off by the fuel companies and while we hate them for it they aren't the only ones doing it.

In 2000 I started delivering bread for one of the top two Australian bakeries (permanent night shift ahh what a crappy life), when I started a loaf of standard 650g bread was $2.27 at the supermarket. That price remained steady for 5 years then like everything the price jumped then between 2005 and 2007 the prices increased 7 times.

Now the supermarket haters will tell you its the big two driving up the cost and while that is partly true 4 out of those 7 increases were initiated by the bakery with the excuse that diesel costs where rising too much. Ok we all knew diesel was going up but at the time this bakery's deliveries were 95% contracted to private companies who had 5 year deals that could not be renegotiated part way through.

It was not the contractors right to put up the price of delivery and while they had to handle wage increases etc they also had to handle the price of their own diesel which was budgeted at the time of contract signing not when the prices rose. Ok some may say that's the hard luck of being a contractor and it could have gone the other way and the contractor could have got a better deal but the point is that the rising fuel costs of getting the bread to the store was already included in a contract for the period of the contract. No contractor was given the extra money from the increase to subsidize their rising fuel costs.

While these bakeries did have some increase in fuel cost for their line haul runs which carted the bread to the suburban and regional depots the 4 increases which saw a loaf of 650g bread rise from under $2.30 to over $3.00 in less than 2 years, and drop down to 600g somewhere in between shows pure profiteering which is the exact thing fuel companies are getting blamed for.

The bottom line here is that while we are all pissed at fuel companies they aren't the only ones ripping us off. Sure if Keating hadn't signed us onto the Singapore fuel market back when he thought he was running the show we might be a little better off now given that we produce enough gas and oil in the country to sustain ourselves but if both his predecessors and successors had the balls to stand up for the country and it's occupants we'd be better off in so many other facets of life too.

Rant Start!
Oh yeah and just as a side note for all those who think cheap bread is not worth having. Plain brand bread in our supermarkets does come out of exactly the same oven in the same plant with the same ingredients as the leading brands. The $1.09 600g loaf at Aldi and it's similar counterpart at Coles are both made in the same oven while the Safeway/Woolies brand bread (not the clear wrapper) is made over at the other mob who also make the Gold max brand. I know this happens in other industries too but the bread industry is one I know and I get a little sick of those paid ads for Bakers Delight on ACA and TT every few weeks. Rant over!