Rising petrol prices are good for us - a bit OT!



alison_b

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http://www.theage.com.au/news/ross-gittins/rising-petrol-prices-are-good-for-us/2006/05/02/1146335727956.html

Rising petrol prices are good for us
  • This pointless struggle to accommodate motoring won't be able to continue.


Traffic stresses us. So public transport will do us no end of good, writes Ross Gittins.

One good thing about next week's federal budget is that even though Peter Costello is flush with cash and likely to offer tax relief to families, he's unlikely to cut the tax on petrol.

That's a good thing because we must learn to live with high petrol prices, not find ways to duck them.

With prices hovering around $1.40 a litre in some cities and Costello warning that worries about the Iranian nuclear stand-off could push them up to $1.60, the motoring lobbies are looking for ways to ease the pain. The RACV, for instance, wants Costello to remove the GST on fuel excise, saving about 3.4 cents a litre.

But whichever way you look at it, cutting the tax on petrol would be the wrong way to go. For a start, there's the conventional economists' argument that the best response to higher prices is higher prices.

Huh? It's not as meaningless as it sounds. Prices rise when the demand for something is growing faster than its supply. Although part of the rise in oil prices is based on speculation about disruption in the Middle East, and so may not be long-lasting, the underlying increase in demand is coming from the rapid growth in the economies of China, India and other developing countries. This is likely to keep upward pressure on oil prices for many years.

But in a market system, a rise in the price of some commodity prompts a change in behaviour. It increases supply by encouraging exploration for new sources, makes formerly uneconomic oil fields profitable and encourages the development of substitute fuels.

At the same time, it reduces demand by encouraging consumers to use petrol more economically and search for cheaper substitutes. Put this reduction in demand together with the increase in supply and you see that a rise in prices should lead to a fall in prices.

So allowing retail petrol prices to move in response to market forces is the best way to minimise the long-term rise in prices likely to come from the developing world's increasing demand for oil.

There is evidence that motorists really are changing their behaviour in response to the higher prices of the past year or two. Despite the continuing growth in our economy, the quantity of petrol sold in Australia last year fell 8 per cent.

In the purchasing of new cars, there's a marked swing away from four-wheel-drives and other gas-guzzlers towards smaller cars. There are even signs of a modest switch back to travel by train and bus.


But the economists' conventional response doesn't fully capture our present situation. We need to limit our use of petrol and other fossil fuels in the interests of the environment.

So, if anything, the tax on petrol needs to be higher, not lower. The recent report on international tax comparisons showed that in the December quarter of last year we had the third lowest level of taxation on unleaded petrol among the 30 members of the Organisation for Economic Co-operation and Development - 49 cents a litre compared with the average of $1.15 a litre.

It really is remarkable the way we can have our regular bouts of indignation over the price of petrol without anyone thinking it relevant to mention greenhouse gases. Politicians and greenies who profess to be terribly concerned about our failure to sign the Kyoto Protocol keep their mouths firmly buttoned.

But, if you accept that the world price of oil is likely to stay high and go higher over the coming years, there's a third respect in which we need to adjust rather than duck.

It concerns the way our state governments have persistently neglected public transport while desperately seeking to accommodate our desire to drive everywhere. Whatever the truth of the claim that the states have allowed public infrastructure to run down, it can't be said of their continuing direct and indirect investment in expressways.

But it isn't working. No matter how many improvements they make, the reduction in congestion is always temporary. Why? Because congestion is the only thing restraining our deep-seated preference for driving.

So when conditions improve, driving increases until the degree of congestion returns to about its former level. The fact that public transport keeps getting worse doesn't help either, of course.

The point is that this pointless struggle to accommodate motoring won't be able to continue. It fits neither with our need to reduce greenhouse gas emissions nor with the likely inexorable rise in the cost of private motoring.

But when finally our state governments get the message that they need to switch their investment from expressways to public transport there'll be a bonus for you and me.

Research into happiness shows that the aspect of people's daily lives they least enjoy is commuting.

And much research by psychologists shows that people find driving through heavy commuter traffic particularly stressful. In extreme cases it can cause gastrointestinal problems, headaches and anxiety. Elevated blood pressure is common.

But if driving through heavy traffic is so bad for us, why do so many of us want to do it? Because human nature is full of contradictions. The state pollie who wakes up to this one will do wonders for our health and happiness.

Ross Gittins is a senior columnist.


It would have been nice to get the cycling option in there... but I thought there were some good points.

ali
 
alison_b said:
It would have been nice to get the cycling option in there... but I thought there were some good points.

Here you go: The Age "Your Say" Transport:

http://blogs.theage.com.au/yoursay/archives/2006/05/transport_1.html

It costs a fortune to fill your car with petrol, public transport is unreliable and overcrowded, and now it has been revealed that some workers will be charged $35 a year to use a locker if they cycle to work! What's the solution? Is there any point working at all or should we all just stay home and watch TV?
 
cfsmtb wrote:
>
> alison_b Wrote:
> >
> > It would have been nice to get the cycling option in there... but I
> > thought there were some good points.

>
> Here you go: The Age "Your Say" Transport:
>
> http://blogs.theage.com.au/yoursay/archives/2006/05/transport_1.html
>
> -It costs a fortune to fill your car with petrol, public transport is
> unreliable and overcrowded, and now it has been revealed that some
> workers will be charged $35 a year to use a locker if they cycle to
> work! What's the solution? Is there any point working at all or should
> we all just stay home and watch TV? -
>
> --
> cfsmtb


Hey I like that option.

*Tam goes home and never comes back*

Tam
 
cfsmtb wrote:
>
> Tamyka Bell Wrote:
> >
> > Hey I like that option.
> >
> > *Tam goes home and never comes back*

>
> You still here?


*sheepish* yeah...
 
> -It costs a fortune to fill your car with petrol, public transport is
> unreliable and overcrowded, and now it has been revealed that some
> workers will be charged $35 a year to use a locker if they cycle to
> work! What's the solution? Is there any point working at all or should
> we all just stay home and watch TV? -
> --
> cfsmtb


****, if it's going to cost me 15c a working day I going drive to work
and spend $20 a day!
 
cfsmtb said:
Here you go: The Age "Your Say" Transport:

http://blogs.theage.com.au/yoursay/archives/2006/05/transport_1.html

It costs a fortune to fill your car with petrol, public transport is unreliable and overcrowded, and now it has been revealed that some workers will be charged $35 a year to use a locker if they cycle to work! What's the solution? Is there any point working at all or should we all just stay home and watch TV?
got my Digital upgrade today, and have RAI for the month of May...I'm ready!

Giro, beer and chips anyone?
 
rooman said:
got my Digital upgrade today, and have RAI for the month of May...I'm ready!

Giro, beer and chips anyone?

'RAI' ???

'RideAlteringImbibement'

Rectal-Anal-Invertor(2000)'?

(new selle italia model ?) :D
 
cfsmtb said:
Ooo you lucky barstool. :)

BTW - Was there any truth to stories about folks in Aus receiving New Caledonia TV TdF broadcasts via satellite?

And another thing - roo - your email addy is bouncing.
yep, like my barstool too...

not aware, but makes sense about NCaledonie, but then they dont have much to do up there but aim their microwave dishes at passing Aussie Naval vessels, guess we know who was doing the watching...

hmmm, obviously not my cot bouncing...thks, will go behind the scenes and dump superfluous accumulate...muchos obligados...
 
On 2006-05-03, Tamyka Bell <[email protected]> wrote:
> cfsmtb wrote:
>>
>> Tamyka Bell Wrote:
>> > *Tam goes home and never comes back*

>>
>> You still here?

>
> *sheepish* yeah...


Tsk.

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