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Government petrol price scheme defeated

Lights out: Independent senator Nick Xenophon blocked FuelWatch, saying it was like a nodding plastic dog - "it provides a distraction, but doesn't do anything".

FuelWatch killed off as petrol prices head back down towards $1 a litre

General News logo13 Nov 2008

THE Federal Government appears to have abandoned its controversial FuelWatch program after the Senate last week rejected the proposed legislation.

At the same time, industry experts suggest that the bowser price of petrol will fall to as low as $1.00 per litre by mid-December as a result of plummeting world crude oil prices.

Independent senator Nick Xenophon last week sided with the Opposition to defeat the government’s national petrol price monitoring scheme legislation, which the government claimed would save motorists at the pump but which was opposed by motoring groups around the country.

Senator Xenophon said that FuelWatch – which would have required every service station to notify its prices each afternoon for the following day – would not achieve the desired result of saving motorists money.

“It was like one of those plastic dogs that sits on the dashboard bobbing its head up and down – it provides a distraction, but it doesn’t really do anything,” Senator Xenophon told reporters.

He then called on the Government to instead tackle the arrangements between buyers and sellers in the wholesale fuel market if it was serious about fuel prices.

Motoring organisations welcomed the news, having been almost universally opposed to FuelWatch, saying that a similar scheme in Western Australia had not resulted in lower prices.

80 center imageLeft: Executive director of the Victorian Automobile Chamber of Commerce, David Purchase.

“While the Government may decide to re-introduce the proposed scheme at a later date, for now the message is clear: FuelWatch is finished,” said the executive director of the Victorian Automobile Chamber of Commerce, David Purchase.

“This is a victory for common sense. The national FuelWatch scheme was flawed from the outset. It would not have saved motorists money. In fact, it would have resulted in higher petrol prices.

“FuelWatch was flawed because it targeted retail fuel prices. The only way to ensure cheaper fuel prices is to allow independent service station operators fair and equitable access to competitive fuel supply at the terminal gate. The wholesale market is all-but wholly in the hands of the big oil companies.

“VACC recommends the ACCC and the new petrol commissioner turn their attention to the operation of the wholesale fuel market, the buy/sell arrangements and the relationship between the oil majors and their supermarket partners.” With crude oil prices dropping to their lowest level in almost two years, CommSec economist Craig James said in a weekly market briefing that the bowser price will soon fall to as low as $1.00 per litre.

“Just a month ago, thoughts of petrol at $1 a litre would have been pure fantasy, but no longer,” said Mr James.

“The wholesale price has been falling over the past fortnight quite significantly. The national average [wholesale] price is down around $1.15, so if it stays there, or falls even further, we’ll see pump prices anywhere between $1.00 and $1.10 at the low end of the cycle. It’s a big change in a very short period of time for consumers.” Motorists in northern New South Wales will not be quite so well-off from July 1 next year, however, following the removal of a petrol subsidy to allow northern NSW service stations to compete with those across the border in Queensland, where state taxes are lower In last week’s state mini-budget, the NSW Government said it will save $44 million by removing the subsidy of eight cents per litre.

To prevent NSW motorists and truck operators from filling up over the border, the Queensland Government is taking steps to ensure that its fuel subsidy will only be available to vehicles registered in that state from Easter.

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