Calls for Government Guarantee on Petrol Prices


The Australian Automobile Association has called on the Federal Government to give a guarantee that the ethanol subsidy announced yesterday will not result in higher ethanol blended petrol prices this year or when the subsidy ceases in 12 months.


Association Executive Director, Lauchlan McIntosh, said that unless ethanol producers pass the full subsidy on to motorists by reducing the wholesale price of ethanol by 38 cents per litre, motorists would pay more immediately. 


Mr. McIntosh said that even if the subsidy is passed on in full, in 12 months’ time, when the subsidy ends and the excise remains, 10% ethanol blends will rise in price by 3.8 cents per litre. "I wonder how Government backbenchers will feel about having to explain to their constituents that this decision has put the price of petrol up," he said.


"The Government claims the subsidy will help create jobs and encourage the development of the industry, but that defies logic unless it is intended that the industry retain all or part of the 38 cent subsidy, which in turn means an immediate increase in prices for ethanol blended petrol.


"AAA has today written to the Transport Minister, John Anderson, seeking a guarantee that petrol prices will not rise now or in the future as a result of this new subsidy and excise arrangement and that ethanol blended fuel will be labelled at the pump.


 "Labelling is essential because of vehicle warranty concerns about blends higher than 10% and to allow motorists a choice. As ethanol has a lower energy content than petroleum, fuel economy with ethanol blended fuels is lower than with normal ULP.


"No product other than petrol is marketed without informing consumers of what it contains." Mr. McIntosh said.


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