Hewson's view: Time to end the oil cartel

Ripped off: The market manipulating capabilities of the major oil companies leads to sudden fluctuations in petrol prices irrespective of domestic or international influences. Picture: Sylvia Liber
Ripped off: The market manipulating capabilities of the major oil companies leads to sudden fluctuations in petrol prices irrespective of domestic or international influences. Picture: Sylvia Liber

You know when you are being ripped off.

This week I filled up my car with standard unleaded at a local servo in the Southern Highlands on two consecutive days, with the price having increased by 25 cents per litre overnight.

Just what was it? What was the international or domestic “factor” or “development” in the oil market that could justify such an increase? There were none, of course, except the market manipulating capabilities of the major oil companies. Not surprisingly, the servo up the road, cosmetically a “different” brand, also raised its price on unleaded by 25 cents per litre.

The Australian Competition and Consumer Commission (ACCC) that is supposed to protect us from this predatory cartel pricing behaviour, asleep at the wheel again!

It is time that the behaviour of the oil cartel was thoroughly examined and exposed.

It is not widely recognised that our fuel is the lowest in quality of all the 35 OECD member nations. It is also not widely recognised that, as revealed in a recent University of Melbourne study, vehicle emissions in our country cause 40 per cent more deaths than the national road toll, not to mention the broader health impacts.

This should be a leading story on every news service until the government does something substantive about it. We have spent decades educating and discouraging smoking. Why haven’t we addressed another significant “killer”, vehicle emissions?

Indeed, we now have restrictions on smoking in outdoor cafes, while we happily let people sit in those cafes along major, congested, roads to breathe in the particulate vehicle emissions.

It is also alarming to recognise that if we were to try to adopt the European vehicle emissions standards that their cars couldn’t operate in Australia on our dirty fuel. As the head of our Chamber of Automotive Industries has admitted, “Without high quality fuel, we cannot get access to coming generations of high technology, low emission engines”.

How is it that the very limited oil refining now done in Australia sees the bulk of the higher quality fuel exported, leaving us reliant and exposed to the import of the dirtiest fuel?

More broadly, with the progressive closure of our major refineries, we are now almost totally dependent on some 44 ships per year bringing our dirty imported fuel from Singapore, with only some 21 days of fuel available across the country as a buffer.

We hear so much “alarmist” talk these days by our pollies about “national security”, and the need to rush through an ever growing mountain of legislation to deal with some particular aspect of the threat, yet surely “fuel security” is a very important, totally neglected, element of our genuine national security?

You might recall the recent example of a military exercise in our north that was delayed when they ran out of fuel – the ship hadn’t arrived on time. You can have all the military might in the world, but fighter planes can’t fly, tanks and ships can’t move, without fuel. You might also recall a recent fuel shortage at Melbourne airport?

We are now almost totally dependent on some 44 ships per year bringing our dirty imported fuel from Singapore.

Of course, the oil majors are masters of mounting their own “threats”, including the threat to close the remaining refineries if their cartel structures were to be dismantled. This will happen anyway. Beyond this they are also masters of “fake news” and propaganda campaigns. Our national interest should clearly outweigh their narrow vested interests, as was done against the tobacco lobby.

With the relevant global bodies in the aviation and shipping industries committing to a 50 per cent and 70 per cent reduction in their emissions by 2050, Australia is not only lagging in terms of its own fuel strategy, but missing enormous opportunities to develop a biofuel industry. We have the feedstock, we have the technologies, we just need leadership to define overarching national strategies for fuel security and our bio-economy.

However, having lost a couple of decades in the climate wars, where our major political parties have concentrated on scoring points against each other, and shifting blame, leaving us without a national energy policy, nor a Climate Action plan, it is clear that they will continue to resist providing the essential leadership, and we will continue as a nation to lag, and be ripped off.

John Hewson is a professor at the Crawford School of Public Policy, ANU, and a former Liberal opposition leader.