The Oil Drum: Australia/New Zealand

We're in the middle of an interesting few weeks in the Australian oil market, so it's worth capturing these charts of international and regional oil prices from the Australian Institute of Petroleum for posterity.

There was a question floating around the TOD editors forum today about reports of petrol shortages in Australia.

This was news to me, so I thought I'd see if there was any truth to the rumour.

After doing some digging, it seems that Shell's Sydney refinery is having technical problems that have caused the flow of premium unleaded to cease for the time being (no skin off my nose - but I had a look at the local servo and it appears that there is no premium to be had, at any price).

I was also interested to see that both Shell and Caltex have other refineries reporting technical problems or scheduled maintenance this month, which means that a lot of the local refined products supply is coming from Singapore instead, causing a jump in Asian prices (not helped by problems in China and Vietnam).

ABC - Shell shortage hits Sydney servos

Daily Telegraph - Holiday petrol runs dry

On Wednesday 7th November 2007 the mainstream 10:30pm ITV news in the UK discusses the "peak oil" documentary Crude Awakening, hears the IEA warning of much higher oil prices, shows how many countries have already peaked and speaks to David Strahan (lastoilshock.com).

In the UK, today's coverage has been driven by the psychological £1 per litre being crossed for the first time (BBC News). Crossing the other threshold of $100 oil, will likely drive further peak oil discussions in the mainstream.

Just yesterday Euan highlighted recent coverage of Peak Oil in the Mainstream Business Press.

Also see: A Tuppence Extra? for more on the UK petrol pricing.

On Monday the 1st October 2007 the UK government increased the duty on a litre of petrol and diesel by two pence taking the duty to 50.35 pence per litre (ppl). This is the first of three increases announced in the last budget. Duty will be increased by a further 2 ppl on 1st April 2008 and 1.84 ppl on 1st April 2009 (Duty Rates .pdf).

The increase has been almost unanimously criticised by the UK motorist, not just because it’s a tax but because it takes UK fuel prices perilously close to the psychological barrier of £1 per litre. On the www.petrolprices.com site a survey receiving 80,000 votes in just a few days indicated 90% in favour of the following statement:

Should the government do a U turn and scrap the extra 2.35p tax on fuel because of unexpectedly high oil prices already hitting motorists hard?

Despite everyone talking about petrol prices it seems that many people don’t understand how that price comes about and certainly have no awareness of the approaching decline in global oil production.

Two points of note on fuel prices. Firstly according to the AA Fuel Price Report - July 2006 (MS Word .doc) the price of unleaded petrol has reached a record average price.

Unleaded prices have risen by 1.6p per litre (ppl) to 97.5p. Diesel prices have also risen, by 1.0ppl, to 99.1p. The price difference between Unleaded and Diesel has fallen to 1.6ppl.

The motoring organisation put the increase down to the usual suspects of:

...conflict in the Middle East, uncertainties surrounding Iran and their nuclear enrichment programme, the annual summer upsurge in motoring in the USA in addition to the continuing high demand for oil from China and India...

The daily national average price seems to be higher still with today's (21/07/06) data showing unleaded coming in at 98.1ppl and diesel 99.5ppl (hat tip mikepepler).

The second point is that on 18 July 2006, the government quietly announced that they would not be implementing the inflation-only increase in fuel duty (1.25ppl) on 1 September 2006 and would review the position later in the year (UK fuel duty rise delayed again).

This should hardly come as a surprise given the recent history of fuel duty price rises we discussed back in May (UK Petrol Prices). There we saw that fuel duty has been stuck at 47.1 pence since Oct 2003 with the annual planned increases being postponed each time. Freezing duty like this in the face of inflation is a tax cut in all but name which is exactly what we at The Oil Drum believe is the wrong response to rising fuel prices. From the April press release:

It is nonsensical for political leaders of both parties to eliminate the gas tax temporarily or permanently as this will only worsen our dependence on oil by disincentivizing the innovation of oil alternatives and oil conservation efforts. ...
The answer does not lie in lowering gas prices, which will only encourage people to drive more and further waste our valuable resources.