Monday, 1 December 2008

Petrol above 1000ml/$ will mean ecological ruin

The last three months have seen the cheapness of petrol soar and Melbourne’s rainfall decline even more. September was the driest on record and there has been little improvement of late.

Such motives, along with eleven successive dry years, ought to convince everybody that Australia should have fuel taxes equal to the combined total of the rest of the world – which would provide incentive for extraordinary levels of innovation by our industry to make at the very least cars so fuel-efficient as to do no damage to the environment or better still a public transit system that will beat the car for any urban journey and most rural ones.

Yet, probably due to the mellowing of Islam that was predicted several years ago by the brilliant demographer Phillip Longman, petrol’s cheapness has been going up and up and up. From a low of a still-very-cheap 590 millilitres of petrol per dollar (590ml/$), petrol’s cheapness has been rising to 953ml/$ last Tuesday, and predictions suggest it could reach 1250ml/$ soon. Though being able to get 1250 millilitres of petrol for a dollar might not seem that cheap in comparison to past eras, it is equivalent to obtaining around 2050 millilitres for a 1988 dollar or 10,611 millilitres for a 1969 dollar.

In reality, petrol now is twice as cheap as in 1969. Indeed, petrol in Australia is currently cheaper than ever at a time when runaway climate change is becoming more and more definite. If petrol’s cheapness keeps increasing, another 4x4 boom is certain since with cheap petrol people who opted for small cars when it was less cheap will surely return to thirsty 4x4s.

If Australia wants to counter climate change, re-indexing petrol excise (which would cut the cheapness to 735ml/$ with excise at 70 cents per litre) and increasing aviation fuel and LPG excise to 70 cents a litre would be tiny step. Australia’s ecology is so fragile that for equivalent levels of protection it would require fuel excise to be around 70 or 80 percent of the OECD total instead of the actual level of 1 percent. Even if the least fragile countries in Europe might have fuel taxes beyond the ecologically necessary, that would mean Australia should aim for a maximum cheapness of 50ml/$ (in more conventional terms twenty dollars a litre). At such a price there would be enough money for a really first-rate public transit system – and with mining and car companies taxed sufficiently to eliminate their dictatorship over transport policy, the country that ecologically needs a superlative mass transit system far more than any other might finally get it.

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