By Kirsty Needham and Matt Wade
August 14, 2004
Petrol prices, which nudged $1.10 a litre at Sydney pumps this week, could stay
high for the long term as global demand surges amid uncertainty over oil
supply, consumers have been warned.
The NRMA has calculated the 15 cents a litre leap in average petrol prices in
the past month has added an extra $22 to each tank filled by LandCruiser
drivers, $11 a tank for a Commodore and $6 for a 37-litre Charade.
The chief executive of the Service Stations Association, Ron Bowden, said:
"Australian motorists have enjoyed a period of very cheap petrol. But, for the
time being, those days are over. We are going to have to get used to paying
more for our petrol."
The oil price spike this year would add $4 billion to the annual petrol bill of
Australian consumers, AMP's chief economist, Dr Shane Oliver, estimated.
The Deputy Prime Minister, John Anderson, said yesterday: "It may very well be
that the era of cheap oil production has ended."
The benchmark international price reached an all-time high of $US45.75 a barrel
on Thursday night as fighting in the city of Najaf cast a shadow over oil
production in Iraq. Political tension in oil-rich Venezuela and uncertainty
over the future of Russia's biggest oil firm, Yukos, have also helped push up
the price.
The NRMA's vehicle policy specialist, Jack Haley, said the price shocks had
disrupted the weekly petrol price cycle at the bowser, which usually hit bottom
on Thursdays, so buyers could no longer rely on finding cheap petrol on a given
day.
"Drivers should keep an eye out when travelling around, and if they spot a good
price, jump on it," Mr Haley said.
Analysts believe the current rally could push the oil price above $US50 a
barrel, and much higher if there were a terrorist strike on a big oil
production plant, especially in Saudi Arabia.
Mr Bowden said financial markets were "extremely jittery" about supply security
as demand for oil climbed.
Oil production capacity is expected to peak in the next few years as demand
grows rapidly, especially as the world's two most populous countries, China and
India, catch up to middle-class Western lifestyles.
"The bottom line is: you can't look forward to extremely low petrol prices
again," said the Commonwealth Bank's oil analyst, David Thurtell.
But the suggestion by an Iranian oil executive in Perth this week that
Australian prices could eventually hit $3 a litre has been downplayed. Analysts
say sustained high prices for oil encourage further exploration and oil
companies to bring other reserves into production.
Mr Thurtell said high petrol prices were not in the interests of oil producers
because consumers would switch to alternatives, such as hybrid cars that run on
petrol and electricity. This would permanently reduce demand for oil over time.
The Service Stations Association does not think the price will reach $3, but
believes it could stay at the current level for some time.
"It is not out of the question," Mr Bowden said. "But it is not as bad as it
sounds. The cost of petrol has declined in relative terms. Cars are much more
efficient. Petrol might be more expensive but we are buying less of it."
Dr Oliver said: "Over the past 25 years the proportion of household budgets
which have gone on petrol would have about halved."
http://www.smh.com.au/articles/2004/08/13/1092340464998.html
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