Tuesday, Aug 24, 2004 at 08:46
There are several reasons for the price differences. Firstly, Australian crude is not the best for diesel production, so most (if not all) of our diesel is produced from overseas crude and costs more than what we extract locally. Secondly, diesel used to be cheaper until the government changed the tax rules on diesel, to bring it to parity with petrol. Thirdly, because our
fuel prices are linked to world prices, our diesel costs can vary significantly. Crude prices tend to rise in the European winter to cope with the demand for heating.
The other thing to note is that if significantly more vehicles went to diesel, then diesel prices could rise even more because of the supply and demand issue. We would have to import more diesel grade crude and likely the costs would rise as refiners tried to keep up with demand.
The real sting, however, is in the vast quantities of natural gas Australia has in the North West Shelf (reported up to a 1000 years worth at current usage) that we export at somewhat around a 1c a litre (if not less) to
fuel Japan's industries. Yet we can't get this for our own use at anywhere near the price.
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