A lot of blather has been spoken about fuel watch. It's a classic
excursion into populism, into being seen as doing something for the
common folk when in your heart of hearts you can do bugger all. Both
sides of politics are in a weird kind of auction to see which of them
can be more in touch with the problems of the common man, when neither
of them can be. This is the government we're talking about. One side
is in power and the other wants to be.

Repeated inquiries into petrol retailing have shown that in the major
capital cities at least, there is ample competition. Retail margins
are on average, about 4 cents per litre, which, even when petrol was a
lot less -- about a dollar per litre -- not unreasonable. Retailing
petrol requires investment in quite expensive to set up and maintain
infrastructure. Because it's a hazardous material, there's extensive
and expensive safety and environmental compliance -- and rightly so.
There's also considerable public liability. Running petrol pumps totes
up a power bill. So even though turnover is considerable, 4 cents per
litre doesn't sound unfair to me, especially when you consider that
many motorists pay be credit card.

So the most one could hope fuel watch to achieve in terms of prices is
to force margins down by some fraction of that 4 cents per litre. It
has to be quite a bit less than that because at some point, it simply
won't be possible to support the retailing overheads and the retailer
will have to get out of the business. So at most it can force prices
down to the point where the retailer thinks it will be marginally less
expensive to him/her to keep trading than to cease.  If a lot of
traders go out of business, retail margins may improve, forcing up
prices.

So the principal benefit to the motorist probably isn't going to be
cheaper prices. More likely it will be a shorter wait to get petrol at
the effective mean price during the cycle. Few people like queueing
for petrol and this process is itself wasteful of petrol. Everybody
(except the oil companies) loses in this scenario.

In the long run of course, what has to happen is a move to a transport
system less dependent on crude oil. More diverse, better and extensive
non-petrol-based transport has to be provided and people have to use
it. We have to start increasing population densities in the suburbs
rather than doing more urban sprawl. We also ought to get cracking
with biofuels (no pun intended). We have masses of marginal land with
waste biomass on it that we could use. We have sugar cane. We could
raise algae. In the long run, this is what has to happen, but its 2020
summit notwithstanding,  the government really can't get past the next
week of headlines.

Fran