[Peakoil] FW: Rising petrol prices are good for us _ Ross Gittins Opinion Page - feature article -The Age -today :)

[Adrian Whitehead]

   _____  

From: Robyn Roberts [mailto:jroberts at alphalink.com.au] 
Sent: Wednesday, 3 May 2006 1:30 PM
To: Adrian Whitehead
Subject: Rising petrol prices are good for us _ Ross Gittins Opinion Page -
feature article -The Age -today :)


Rising petrol prices are good for us
 
Ross Gittins Opinion Page - feature article -The Age 
 
May 3, 2006
Page 1 of 2 | HYPERLINK
"http://www.theage.com.au/news/ross-gittins/rising-petrol-prices-are-good-fo
r-us/2006/05/02/1146335727956.html?page=fullpage#contentSwap1"Single page 
 
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.

*	Page 1 HYPERLINK
"http://www.theage.com.au/news/ross-gittins/rising-petrol-prices-are-good-fo
r-us/2006/05/02/1146335727956.html?page=2"2 

*	HYPERLINK
"http://www.theage.com.au/news/ross-gittins/rising-petrol-prices-are-good-fo
r-us/2006/05/02/1146335727956.html?page=2"Next page


--
No virus found in this incoming message.
Checked by AVG Free Edition.
Version: 7.1.385 / Virus Database: 268.5.2/329 - Release Date: 2/05/2006



-- 
No virus found in this outgoing message.
Checked by AVG Free Edition.
Version: 7.1.385 / Virus Database: 268.5.2/329 - Release Date: 2/05/2006
 
-------------- next part --------------
An HTML attachment was scrubbed...
URL: http://act-peakoil.org/pipermail/peakoil/attachments/20060503/eb31ff88/attachment.htm