grodscorp@grods.comFuelWatch a big mistake
 | Posted by Scott on Thursday 29 May 2008, 11:20 am Categories: Politics Tags: BrendanNelson, FuelWatch, KevinRudd, Labor, LiberalParty, petrol |
I said it the other day and I’ll say it again now: it’s extremely disappointing that the dominant political debate in this country at present (and for the foreseeable future) is about slashing a teensy four or five cents from the skyrocketing price of petrol by fiddling with taxes. This issue should’ve been addressed ten years ago because now there’s nothing we can do in the short-to-medium term about our dependence on oil or its underlying price.
But both major parties have placed themselves on this ridiculous battlefield, both are looking like dickheads, and both are proposing bad policies. Brendan Nelson and the opposition have gone into middle Australia worship and battler empathy overdrive, demonstrated excruciatingly by the good doctor in Parliament the other day. And Labor, desperate to look like they’re doing something when there’s basically nothing that can be done, has released their kneejerk FuelWatch policy.
I can’t believe I’m going to say this but FuelWatch stops the market from delivering the cheapest prices by restricting the function of competition. Putting aside collusion (which has rarely been proven and is monitored like a hawk by the ACCC) petrol retailers at present monitor their prices throughout the day and react to other outlets’ prices as necessary. FuelWatch prevents service stations from lowering (or raising, to be fair) their price after their initial price point is set the night before, therefore preventing them from reacting to a lower price on offer down the road.
I feel dirty.
Besides, the majority of analysis seems to indicate that FuelWatch, at best, delivers very little in terms of cheaper petrol and, at worst, raises prices marginally. Bad policy no matter which way you look at it.
Labor got itself into this mess by campaigning on cost of living issues and their subsequent need to “do something” once they took office. It’s a shame that the first major blow struck against Labor this term was mostly their own fault.
Thursday 29 May 2008, 11:53 am #Leon Bertrand
I agree. Rudd’s not at fault for the rising prices, only for giving the impression he could act on them.
Remind me of Howard’s reception of the electorate on interest rates, and how it won him the 2004 election but came back to bite him badly in 2007.
Thursday 29 May 2008, 12:03 pm #Terry Wright
Just like other items that are dictated by a larger worldwide market, petrol prices are set by world oil prices. No biggy there.
THEN WHY THE FUCK ARE THEY EVEN STILL TALKING ABOUT IT?
Surely most people realise that unless we remove billions of dollars from government revenue for a lousy 10-20¢ price drop, that petrol prices are out of our control. The government is listening to the morons who don’t understand and are making the most noise. The same dickheads probably who blame Keating for the worldwide tight monetary conditions that pushed Australia’s interest rates up many years ago.
I though only Americans couldn’t think beyond their countries borders.
Thursday 29 May 2008, 12:03 pm #Wah
We need to stamp out the myth that government can control fuel prices and interest rates. Now’s the time for Rudd to get this out, take a hit and get on with the rest of his term.
I’m sick of media commentators continuing to push this story despite knowing that high fuel prices are a global pheonominan and going on and on about people hurting when most are not - it’s all about priorities.
Their stupid agendas are giving us bad government.
Thursday 29 May 2008, 12:05 pm #Terry Wright
So right, Leon.
It’s government spin on controlling prices on items we have very little control of.
Thursday 29 May 2008, 12:14 pm #Zombie Mao
maaaaaaaaan
such a mess over total bollocks.
Fuelwatch dosn’t hurt. Dosen’t make much of a difference though. At least it provides a ready reference on fuel prices. But given the rise of the price of oil, its peanuts.
Thursday 29 May 2008, 12:35 pm #Steve D
The only way to reduce the price-cycle effect is to get everyone (literally everyone) to stop buying petrol on the expensive days. Once there is no benefit to raising the price, they will stop doing it.
The 5-10c reduction was handled previously when excise indexation was removed. The excise had risen around 8c in six years (1994-2000). Since the GST it has been fixed at 38c (which means GST on the excise has also been fixed at 3.8c).
Of course, the big problem is that Rudd pretended that he could actually do something, just like Howard did with interest rates. It was always a gamble. It just isn’t paying off and he now has to handle the political fallout.
Thursday 29 May 2008, 12:40 pm #keri
What people need to realise is that the difference between crude oil prices and petrol prices at the bowser (I’m such a geek I just typed Browser and had to correct!) is due in large part to the purchase of crude oil as a futures commodity. The international market needs to take a stand against this practice, and the restriction of oil available to market will cease, and petrol prices will drop.
What other reason does anyone else have for the difference in price between what we are paying and what the European and American markets are paying?
Thursday 29 May 2008, 12:50 pm #Zombie Mao
hmm
ekanomiKs
ermm
ekanomics
ermm
ecananomics
ermm
money n shit
I am not good at that subject.
Futres commodity.. hmmm… . Is that like betting on the horsies ?
Thursday 29 May 2008, 12:52 pm #keri
You’re not far wrong, Mao. You’re basically hedging your bets that X commodity will attain Y price by Z date.
It effectively means that there are supertankers sitting in the gulf with nowhere to unload, as the oil is already “purchased”. Except in real terms, it isn’t at all.
It’s much the same as the commodities market on grain.
Thursday 29 May 2008, 1:20 pm #Terry Wright
The problem is Keri, companies that purchase or sell oil for actual production (not speculative traders) will always ‘forward’ trade as a hedging mechanism (for liquidity, share price stability etc) . The Futures market is just a facility to be able to transact the forward agreements cleanly.
Of course this opens the market to traders who don’t hold a position but merely buy and sell for a margin.
The much loved open market syndrome where if it has value … let’s trade it.
Thursday 29 May 2008, 2:05 pm #Zombie Mao
ooo has Rudd pwned nelson?
http://www.abc.net.au/news/stories/2008/05/29/2259298.htm
Thursday 29 May 2008, 3:22 pm #Zombie Mao
“Queensland Liberal leader Mark McArdle has contradicted his federal counterparts and expressed support for FuelWatch.
Mr McArdle says FuelWatch is worth considering.
“The issues around FuelWatch are very complicated, but certainly it is an initiative that appears to have worked in Western Australia and I think it should be looked at here in Queensland and across Australia as well,” he said.
“I understand that my federal colleagues may have a different point of view, that’s their point of view.”
oopsie
Thursday 29 May 2008, 7:55 pm #joe2
“has released their kneejerk FuelWatch policy.”
Wasn’t it released as an election policy before the election? If so, the government would be obliged to introduce it.
Looks like it has worked well in W.A.
Thursday 29 May 2008, 8:28 pm #The Editor
If so, joe2, it was still a kneejerk policy announcement.
Thursday 29 May 2008, 8:49 pm #joe2
I reckon anything that is capable of reasonably ordering distribution of the last little drops of fuel is a good idea and should have been done years ago.
Thursday 29 May 2008, 9:38 pm #Leon Bertrand
joe2,
People in WA actually pay the highest prices for fuel. As Martin Ferguson ad 4 separate government departments have pointed out, Fuelwatch is anti-competitive because it doesn’t give retailers the chance to lower their prices in response to their competitors.
I think the market is generally the best way of ordering distribution.
That’s what most economists say, anyway.
Thursday 29 May 2008, 10:20 pm #John Surname
“ooo has Rudd pwned nelson?”
You sound surprised.
This is why Nelson’s five cents off plan is rubbish - it would be absorbed in a week.
Thursday 29 May 2008, 10:53 pm #joe2
Leon, the free market only works when there is bucketloads of a particular product. We are moving to a stage where petrol is likely to be rationed. It will get crazy, on the roads with queues near service stations, on the present “cheap days”, if something is not done now.
Friday 30 May 2008, 6:15 am #Jack Dorf
Up to this point in time I’ve not been sure if I’m for or against Fuel Watch.
But having read this number crunching post by Possum Comitatus, I think I might be in the support camp.
Friday 30 May 2008, 7:03 am #Leon Bertrand
“Leon, the free market only works when there is bucketloads of a particular product. We are moving to a stage where petrol is likely to be rationed. It will get crazy, on the roads with queues near service stations, on the present “cheap days”, if something is not done now.”
On the contrary. In the free market, price acts as a mechanism to curb demand when it is in excess. There is no “rationing”, and there are no long queues. Those are features of a planned economy, where goods are frequently under-valued, thereby causing shortages.
Friday 30 May 2008, 8:54 am #Damian
Leon, how is the free market working for rice? (Hint: ask a Filipino slum-dweller.)
Friday 30 May 2008, 8:56 am #Damian
Re fuelwatch, I only hope that fuelwatchwatchwatch is up and running before too long. I’m looking at you, Jeremy.
Friday 30 May 2008, 9:32 am #Leon Bertrand
Damian,
The Philippines has been experiencing strong economic growth of late. This usually means that lower income people are becoming more prosperous because there are more jobs, higher wages etc. As a result, most slums dwellers there would probably have enough rice.
I don’t know much about The Philippines and its rice market. However, if there are any shortages, the situation would be worse if the government nationalised rice. All credible economists agree that the private sector runs most industries better than the public. If government took over, there would be even less rice produced, or else the rest of the economy would be wrecked.
And, if growth continues, conditions should continue to get better for slum dwellers. With higher incomes they will demand more rice, which will increase incentives for rice-growers to expand their businesses and encourage others to invest in the industry too. The result is more production, less hungry mouths and more economic growth.
Friday 30 May 2008, 9:40 am #Damian
Leon, I understand the theory.
Fact is, if the government wasn’t distributing food to the poor and imposing restrictions on the exportation of rice then millions would likely be going without. Rice is eaten at every meal in many parts of SE Asia. What do you think happens to kids when there is no rice?
Markets have their uses, but they also have the capacity to produce outcomes that are not in the interests of society. Prescribing “free markets” as a solution to everything is a denial of this simple fact. Markets should be utilised when they work. When they don’t we should take remedial action to protect the vulnerable.
Friday 30 May 2008, 9:47 am #Damian
It’s getting serious in here. Maybe Leon and I can get a private chat room.
Meanwhile, I’m off to Wordpress to start FleshlightWatch.
Friday 30 May 2008, 5:58 pm #Leon Bertrand
Dear Damian,
I don’t disagree with what you are saying, although I would add that many problems associated with firms not benefiting the rest of society has been as a result of government intervention. For instance, most monopolies have been the direct result of government intervention rather than a lack of it, as many believe.
I’ve read a bit about the Philippines. Apparently many local producers want to produce bananas and other more profitable crops, whilst domestic farmers produce only about 92 percent of the nation’s requirements.
From this, it can be observed that they would be better off exporting bananas which are more expensive, and importing rice, which is cheaper.
So even the Philippines experience shows that like Fuelwatch, governments often interfere too much rather than too little.
http://afp.google.com/article/ALeqM5i9uyYzhV1GZNTHiZC6c6ydvgmeRg
Monday 2 June 2008, 8:07 pm #Adam
Fact: our economy cannot grow forever without an endless supply of oil or any other resources.
Fact: our planet does not have an endless supply of oil or other non-renewable resources
Fact: Peak oil is here or nearly here.
Fact: Our society and civilizations can only exist and people in them can only be fed with fossil fuel inputs due to our agricultural and transport methods.
Fact: Free market, mainstream economists and leon bertrand are idiots.
Fact: we are fucked if we don’t change things soon
Monday 2 June 2008, 10:42 pm #Zombie Mao
fuelwatch was a boo boo
Kevins peroanl support has dropped. PPM is now 66-17. Brendan is now 17% !!!
However the TPP vote hasn’t shifted. 57-43
indepth look at figures indicates possible shift to greens, but statistically wobbly
http://www.mumble.com.au/
So break out the Bubbly Brendan. 17% 50% improvement!