News

Motorists Will Not Pay For Oil Companies to Upgrade Their Refineries

23.5.2001

While welcoming the Government's decision to introduce cleaner fuels from next year, the Australian Automobile Association has flatly rejected suggestions that motorists should pay more for the fuel to cover the cost of upgrading refineries.

 

AAA Executive Director, Lauchlan McIntosh, said motorists should, in fact, be paying less for cleaner fuels as an incentive to use them.

 

He said it was up to oil companies to absorb the cost of upgrading refineries out of the record profits they were currently taking from motorists. "Why on earth should motorists pay for product improvement by multi-national companies?" Mr. McIntosh asked. "Product improvement and facilities upgrading is factored into refinery planning. The Companies will be expected to pass on the 1.5c/l savings from the ANTS package as well in the next few years." he said.

 

"Shell Australia recently announced a record after tax profit of $1.3 billion for the calendar year 2000, more than double the previous year’s profit. Industry estimates are that it will cost around $170 million per refinery in Australia to meet the new standards. Shell owns two refineries in Australia and so could easily afford the upgrade without putting their hands in the pockets of motorists."

 

Mr. McIntosh also called on the Federal Government to follow the British example and cut excise on cleaner fuels as an incentive for motorists to shift to them.

 

"If cleaner fuels end up costing more, why should motorists use them? The Government should reduce excise on cleaner fuels making them cheaper and therefore encouraging people to use them.

 

"In Britain the Government cut excise on ultra-low sulphur diesel and as a result its usage rose from 20 per cent in 1997 to 100 per cent in 2000. Britain has now introduced a similar program for petrol offering a cut in excise on low sulphur petrol equivalent to eight-cents per litre (three UK pence). They expect 100% low sulphur petrol use by the end of next year.

 

"If the Government is serious about introducing cleaner fuels and encouraging their use, it must adopt a 'reward' approach rather than a 'penalty' approach. It must also make it clear to the oil companies that motorists are not going to pay for their corporate expansion,' Mr. McIntosh concluded.

Related Documents