Govt tries to do something on petrol

In a fairly desperate attempt to look like it is doing something, the Government has said there will be an inquiry into petrol prices – an inquiry that has oh no terms of reference and no chair (they say one has been appointed but his or her name is a secret!).

The Government is also looking at a Fuelwatch scheme where oil companies post tomorrow’s prices on a website. This is based on the Australian scheme. Well people should be aware of the controversy in Australia over the scheme.

In some rural areas it may lead to higher fuel prices! And what does the Federal Resources Minister say on the scheme:

The debate flared today after the leaking of a letter sledging the Federal Government’s Fuel Watch scheme by Resources Minister Martin Ferguson.

Mr Ferguson slammed FuelWatch as an anti-competitive waste of money in a letter sent to Consumer Affairs Minister Chris Bowen and copied to Prime Minister Kevin Rudd, Treasurer Wayne Swan and Finance Minister Lindsay Tanner.

And more from Ferguson:

“Your assertion that Fuel Watch will be pro-competitive is unsubstantiated and ignored the very substantial evidence that it is anti-competitive,” Mr Ferguson wrote. “I remain more concerned about the substantive elements of Fuel Watch, which I believe will seriously damage the Government’s economic and regulatory reform credentials.” …

Mr Ferguson wrote that independent service station owners in Perth had opposed Fuel Watch and that since it had been introduced, some had gone out of business.

If Fuel Watch is the answer, then we are asking the wrong questions.

The reality is that movements in the global price are far far larger than any local costs and/or taxes. Rather than trying to dupe consumers that there is some silver bullet, we need to make sure people can afford the cost of petrol which means higher after tax income.