FUEL PRICES - THE NONSENSE CONTINUES…
Reluctantly, the Federal Government has commenced the process of running an ACCC inquiry into oil company's fuel pricing, which, coincidentally, is due to conclude in early October just prior to the 2007 Federal election.
It would be of benefit if any such inquiry could relate the price of fuel back to economic conditions because there seems to be little correlation between the price of oil, the currency exchange rate and the retail price of fuel. There simply has to be some more relevant set of relationships that determine the retail price, assuming of course that pricing isn't completely arbitrary.
Our constant belief, or at least hope, is that the Government takes a passing interest in the price of fuel, in the consumer interests of course. There is however a chance we could be completely wrong in this regard.
For at least two decades successive Governments have had the opportunity to either clarify or explain the retail price of fuel or in the alternative develop some sort of pricing mechanism that was equitable to all. Obviously, nothing has been done.
Certainly the Government could have a real and genuine interest in the price of fuel but it may not necessarily be to our benefit. Take today's circumstances. We have a booming economy and we have a Reserve Bank hanging back from what seems an inevitable interest rate rise because of the forthcoming Federal election.
Under normal circumstances the Reserve Bank simply will not allow its decisions to be politically interpreted but despite the threat of an interest rate rise being trotted out, which is generally enough, economic circumstances still leave it as an open option.
In short, it undoubtedly appears the government is at ease with fuel price increases, as it tends to take money out of the community without the government having to cope with the embarrassment of another interest rate rise leading into a looming federal election!
Interest rate rises are used as a tool to cool down an economy and hold inflation steady. Inflation in the Australian economy is presently being understated and at least two 25-point interest rate rises will be required after the forthcoming election, regardless of whichever political party finally takes office.
In the meantime, are the oil companies reluctantly taking the additional profits merely to assist the major political parties? Sadly, all the consumer is getting are crocodile tears!
The obvious solution is three-fold, firstly remove the GST on fuel, secondly, repeal fuel parity pricing legislation and, thirdly, regulate fuel prices.