News

Call for Ethanol Industry Transparency

25.7.2003

The Australian Automobile Association has called on the Federal Government to impose greater transparency in the pricing of ethanol and ethanol blended fuels.

 

In particular the AAA would like to see Terminal Gate Pricing (TGP) for ethanol in line with Federal Government requirements for other fuels. The Executive Director of the AAA, Lauchlan McIntosh, said today that the Government was planning to hand hundreds of millions of dollars of tax-payers money to ethanol producers over the next few years with little accountability, virtually no public scrutiny and no certainty that fuel prices will not rise as a result of the decision.

 

 “The Government plans to boost ethanol production to around 350 million litres per year, which will attract over $130 million dollars in subsidies every year. The Government has also decided to provide an additional $10 million over the next six months to producers,” Mr. McIntosh said.

 

“We would like to see the government bring ethanol into line with other fuels through Terminal Gate Pricing (TGP). The draft new oil code, which will come into effect shortly, mandates Terminal Gate Pricing under the Trade Practices Act for other fuels such as petrol and diesel, so why not ethanol? TGP for ethanol would require producers to publicise their wholesale price and in turn that would put downward pressure on retail prices. “We would also like to see a regular independent audit of the $0.38 cent subsidy being paid to producers to ensure it is being passed on to motorists. While low oil prices may mean ethanol producers need the full $0.38 cents to compete, that is not the case when oil prices are high. When that occurs the benefits should flow to motorists through cheaper fuel prices, not into the pockets of ethanol producers,” Mr. McIntosh said.

 

The Australian Automobile Association had welcomed the Government’s decision to cap ethanol at 10% in fuel blends as well as their approach to encourage a national labelling scheme to ensure motorists were well informed about the implications of using ethanol. Mr McIntosh said that the Association had consistently called for no increase in price with ethanol fuel blends and no mandating of levels of ethanol in petrol.

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