Diesel Pricing Review

Submitted: Thursday, Jan 17, 2008 at 11:05
ThreadID: 53573 Views:2971 Replies:12 FollowUps:13
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G’day all,

I am fed up with the high prices we have been paying for DIESEL, and therefore I have decided to do a bit of ‘stirring’. There are a number of reasons why we purchased a diesel vehicle, including greater towing torque, but the main reason was the far greater economy of the modern diesels compared to petrol engines. That benefit, however, is being eroded or outweighed by the higher price being charged for diesel.

Search engines on the internet allow us to research all sorts of information, but I believe we need to exercise some caution regarding what is published. One major oil company / fuel distributor has a site that supposedly provides the ‘plain facts’, but also tells us that petrol prices do not go up for long weekends. There will be some accurate information, but also, I expect, some ‘biased’ information.

I urge you to do your own research, but one site that MAY provide interesting reading is: http://www.aip.com.au/pricing/facts/Facts_about_Diesel_Prices.htm

Most sources advise that diesel is a less refined fuel than petrol, and therefore we could expect it to be cheaper. Depending on the original source, ie the type or grade of crude oil, coals etc, there will be a different ratio of diesel recovered compared to petrol and other hydrocarbons, and the diesel can even be a by-product. However, other sources will say the supply and demand govern the final price – ie there is more demand for diesel in Asia and Europe, so our price is higher.

What is the truth? I’m only a ‘layman’, so how can I really know the truth? Last year the Federal Government arranged for the ACCC to review petrol pricing and questions of market manipulation etc. But the review did not include diesel. [And personally I don’t think the review of petrol was all that inspiring. The ACCC needs to get tough and have some real teeth before it is going to achieve much.]

Now that there has been a change in government, I understand there may be a new enquiry – I’m not sure who or what organisation will conduct it, though. If there is a new enquiry, it MUST include diesel. We need to demand the inclusion of diesel. It is interesting to visit the following site, where the RACQ is urging a review of diesel pricing. They seem to think Queenslanders are paying 5 cents a litre too much for diesel. Well, I’ve got news for them, we all are paying too much for diesel! Check out:
http://www.news.com.au/couriermail/story/0,23739,22926456-3102,00.html

I do not want to go on too long in one post, but I do want to sow the seed to get some action. I urge all diesel vehicle owners to write to the following people:

The Hon Kevin Rudd
Prime Minister
Parliament House ACT 2600

and

The Hon Chris Bowen
Assistant Treasurer
Parliament House ACT 2600
(Chris Bowen is responsible for making sure the ACCC do their job.)

and contact your local Federal Member (contact details available at):
http://www.aph.gov.au/house/members/mi-state.asp

• Outline your concerns about diesel pricing
• Demand that any new fuel pricing review by the ACCC must also include diesel prices
• Require that diesel is included in the discount cycle with petrol perhaps by nominating a maximum price differential
• Include your own comments etc, but keep it clean and to the point.

The change in Federal Government may be our chance to get some action on this matter, but we need to get off our butts and prod them. While we are on it, why not request a reduction of the excise on fuel to cover the GST being charged on it – the tax on a tax problem!

Over to you guys…
Cheers,
glids
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Reply By: Bware (Tweed Valley) - Thursday, Jan 17, 2008 at 11:21

Thursday, Jan 17, 2008 at 11:21
Whenever the question is asked about the price of diesel when it is cheaper to make, the answers received are always about competitive pricing for petrol, and demand for diesel in the Northern Hemisphere. This cannot be a valid explanation due to the fact that these 'reasons' also existed when diesel was cheaper. Therefor diesel should still be cheaper unless someone has increased their profit margin.
AnswerID: 282054

Follow Up By: Member - DAZA (QLD) - Thursday, Jan 17, 2008 at 11:44

Thursday, Jan 17, 2008 at 11:44
Hi
We purchased our first Diesel Vehicle in 1991, diesel was 20 cents
a litre cheaper than petrol, I remember we had to use the High
Volume Pumps at certain service stations that catered for heavy
vehicles. these days I pass the increase costs on to our customers.
the same way we pay for cartage.
Maybe we could organise a rally in each state on the same day to
protest, with our vehicles, out side the Politicians Rest Camps.

Cheers
Daza
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Reply By: Louie the fly - Thursday, Jan 17, 2008 at 11:32

Thursday, Jan 17, 2008 at 11:32
There was a comment made the other day in the media that the days of petrol engines in cars are over. I think the source was from the Euro car makers. What??? that means more diesels which probably means higher prices still.



AnswerID: 282056

Reply By: Andrea11 - Thursday, Jan 17, 2008 at 11:37

Thursday, Jan 17, 2008 at 11:37
Hi there Glids,

I have taken up the challenge and written to the Prime Minister with regards to all fuel costs, Petrol and LPG along with Diesel.

We have a Landrover Discovery and have duel fuel Petrol/LPG and I believe that Australia sells it's LPG to China alot cheaper than what we sell it to our own consumers and this really bites the big one.

I have sent my e-mail to K Rudd at this web site
http://www.pm.gov.au/contact/index.cfm?p=2

Perhaps if we all have a say, then we may get things done!

Power to the PPL
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Follow Up By: Louie the fly - Thursday, Jan 17, 2008 at 11:48

Thursday, Jan 17, 2008 at 11:48
I'm always in for that kind of thing and I think everyone should do it to voice their opinion. After all, they work for us. I will do it today. When we get a response it would be worth starting a thread about it to compare the responses we get.
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Follow Up By: Robnicko - Thursday, Jan 17, 2008 at 12:24

Thursday, Jan 17, 2008 at 12:24
Good Idea!
Just looking at the current price for crude on the net and oil has dropped to US$90 pbl. Thats $10 or 10% from the recent high. lets see if a 10% drop in fuel price follows? Seems to happen when it goes up, why not the other way I ask.
Rudd wont do a thing about it. He clearly stated that in a pre election interview on 3AW last year.
Refineries need to be built in order to produce more and Australia should be pricing it according to what it costs locally not what it costs overseas.
LPG is going up because the Saudis say so..........it's naturally occuring in Bass Strait and thats where we get it from. Why should we pay 70odd cpl when it's exported to China for 4.5cpl?

The govt will not do anything because they don't give a damn...
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Reply By: KSV. - Thursday, Jan 17, 2008 at 12:08

Thursday, Jan 17, 2008 at 12:08
Do not full yourself!

Does not matter what you do result will be nothing. Remember that diesel cars and 4WDs consume drop in ocean comparing to trucks, vessels, agricultural, earthmoving and mining equipment. Therefore our influence here is negligible – we are just by-passers. Thus any protest like “two days no diesel refuel” even done by *ABSOLUTELY* everybody Australia-wide will make *ABSOLUTELY* zero effect.

Write to government or member of parliament to ask them about fair price?!? And you believe that it can change something? Dream on! They *DO* know that prices on all fuel absolutely robbery, as least because we are paying tax on tax (GST on levy) and yet all government perfectly comfortable with this. Furthermore – in pre-election campaign *NO-ONE* even mention this issue!

So you *WILL* be screwed, does not matter what and nothing can be done. Just relax and try to enjoy.

Sorry for so negative post.

Serg
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Follow Up By: Cruiserman1961 (QLD) - Thursday, Jan 17, 2008 at 12:32

Thursday, Jan 17, 2008 at 12:32
Hi Serg,
there is only one thing about your post that you have to be sorry about. The fact that you are bloody right. No action on our part will make any difference to the blatant ripoff that is going on.
Making sure the car is in good condition and changing one's driving style is about as much as can be done by the individual.
So just relax and enjoy the privilege of having a car as long as it lasts, hey!
We are still the lucky ones on the planet....
Cheers, Udo
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Follow Up By: Andrea11 - Thursday, Jan 17, 2008 at 12:40

Thursday, Jan 17, 2008 at 12:40
Hi Serg & Cruiserman,

I fully understand and respect your views, I just however believe that if we just take the stance that there is nothing we can do about it and attempt nothing then we are only as ppl saying "Its ok do what you like" to our government.

It is true that possibly nothing will come out of voicing an opinon, but surely it can't hurt to at least be herd, because what really is the alternative?

Just my View
Andrea
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Follow Up By: glids - Thursday, Jan 17, 2008 at 12:51

Thursday, Jan 17, 2008 at 12:51
Thank you Andrea.

If we don't complain, *ABSOLUTELY* (quote from above) nothing will be done about the pricing.

If enough start complaining, maybe, just maybe, they will listen.

I know they have a huge majority in government, but they still want to impress and stay there.

cheers,
glids
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Follow Up By: Cruiserman1961 (QLD) - Thursday, Jan 17, 2008 at 12:52

Thursday, Jan 17, 2008 at 12:52
Hi Andrea,
you are right in the assumption that it wouldn't hurt to make one's opinion heard but i do believe that we are barking at the wrong tree.
The problem as I see it is that previous governments have allowed for multinational corporations to become so powerful that they can blackmail any government (and therefore us) without any fear of retribution. Monetary policies are made on Wall street and not in individual countries anymore. Fuel companies like Castrol, Bp, Esso etc. can dictate their prices and have done so for quite some time.I would like to see Kevin having a go at it but i fear it is too late to turn the clock back...
Cheers, Udo
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Follow Up By: KSV. - Thursday, Jan 17, 2008 at 14:15

Thursday, Jan 17, 2008 at 14:15
Glids,

Sorry, mate, I am completely with you because I am also driving diesel. You and Andrea right in term that if to do nothing then nothing going to happens. I just passed through exercise of complain to my member of parliament in the past and do not like to eat such sh1t anymore. Thus considering chances of success I would rather spare my nerve system and as suggested above tune my tractor and easy my right foot. Sorry once more.

Serg.
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Follow Up By: Louie the fly - Thursday, Jan 17, 2008 at 17:57

Thursday, Jan 17, 2008 at 17:57
KSV, just remember, it's our right to protest. Some years ago the federal government were going to completely scrap the tarrifs on imported cars. At the time I was involved in a family owned business as a 2nd & 3rd tier supplier to the vehicle industry in Adelaide. Through an industry group we got people to write letters to their local members and to the industry minister. I'm not suggesting that it was this alone that made them decide to change their view, albeit for 10 or so years, but it would have opened their eyes a bit I think. We also welcomed the pollies into our business premises to see what we actually do. Some took up the offer, some didn't give a sh*t.

Can do any harm.
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Reply By: mfewster - Thursday, Jan 17, 2008 at 12:42

Thursday, Jan 17, 2008 at 12:42
Prices in Oz are still considerably cheaper than In Europe. The LPG we put in vehicles is not the same stuff as the LNG we sell overseas. LPG is a derivative of the oil cracking process (I think) and the price will therefore move with oil prices. Just because barrel prices fall by 10% doesn't mean bowser prices should fall 10%. The barrel price is only a part of the cost.
The big question is why the previous government squandered the windfall from fuel taxes on tax rebates instead of investing ininfrastructure (which was the original point of the tax.) Will the new government do the same?
The interesting possibility is the technology that turns LNG into diesel. We have lots of LNG (as long as we don't sell it all). So far I have seen no discussion of plans to use this technology in Australia.
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Follow Up By: Member - John (Vic) - Thursday, Jan 17, 2008 at 13:53

Thursday, Jan 17, 2008 at 13:53
Compressed natural gas is used by a number of bus companies in Victoria. The technology and equipment used to support the use is relatively expensive compared to other fuels and so has not been popular on a wider front.

Your Correct LPG (Liquefied Petroleum Gas) is a refining by product as opposed to LNG (Liquefied Natural Gas) from say Bass Straight among other places.

There was a web site I saw sometime back (can't find the bugga now) that provided the cost correlation between the barrel price of crude and the relationship to one litre of say Unleaded Petrol and the price movement as expressed as a percentage does not and never has moved at the same rate due to so many other variables such as exchange rates.

As for Federal Government squandering (Your view), well lets just see how Mr Dudd does on that front given the history of Labour Governments.
But just remember that Mr Dudd went to the election with a largely matching tax policy as Howard including 34 odd billion dollars in tax cuts.
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Reply By: Member - Philip S (SA) - Thursday, Jan 17, 2008 at 12:49

Thursday, Jan 17, 2008 at 12:49
Glids,

Yes it's a sore point alright. Been discussed here many times before. Look at Thread 50044 from last September, wherein I suggested a 'Diesel users coalition"to agitate for fairer pricing.

Sadly, not a lot of feedback, and I think there's a despondent view that nothing can be achieved. But as the man once said, "All that is necessary for the triumph of evil is for good men to do nothing."

Key question I raised then and still do not have an answer for is the relative gross margins that the oil companies get on retail fuel as between petrol and diesel. I strongly suspect that their margins on retail diesel are MUCH higher than for petrol, and go some way towards cross subsidising the petrol discounting. Who can blame them having predatory pricing IF they can get away with it? We are in a market economy after all.

However, if there was enough of a public outcry then maybe, just maybe they might start to level things up a bit.

In general one would not want price controls in a free market, but maybe the federal government can be persuaded to reduce its excise on diesel as an incentive to get people to switch.

If there was a big switch to diesel by the public over time, then competitive pressures would make the oil companies become more competitive on diesel, just as they are now on petrol. But in the meantime, its Catch 22.

I particularly agree with you that the ACCC should include diesel in any fresh inquiry into fuel pricing. They might be able to do something it it was found that retail diesel pricing was predatory.

I am writing to Rudd, Bowen and my local MP along these lines as you suggest.

Cheers

Phil

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Follow Up By: glids - Thursday, Jan 17, 2008 at 12:55

Thursday, Jan 17, 2008 at 12:55
Thanks Phil.

I suggest you include a querie about margins (diesel vs petrol) in your letters, get the ACCC to look into it.

cheers,
glids
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Reply By: Footloose - Thursday, Jan 17, 2008 at 13:29

Thursday, Jan 17, 2008 at 13:29
This is an easy one. We're getting screwed more than once. Who uses the majority of diesel in this country ? Businesses. And for them it's a cost so it's a tax deduction. Of course its also passed along to us as higher prices for transport. So we're done over twice I rekkon.
It also helps to explain why the little guy gets nowhere protesting about diesel prices.
I
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Reply By: Footloose - Thursday, Jan 17, 2008 at 13:31

Thursday, Jan 17, 2008 at 13:31
Who uses the majority of diesel in this country? Businesses.
And its a cost of production for them, so its a tax writeoff.
We get screwed twice.
Once at the pump and once with the increase in prices due to higher transportation costs.
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Follow Up By: Footloose - Thursday, Jan 17, 2008 at 13:32

Thursday, Jan 17, 2008 at 13:32
Oopsies...double post...kinda like what I was on about :)))))
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Reply By: redfive - Thursday, Jan 17, 2008 at 14:59

Thursday, Jan 17, 2008 at 14:59
Gentleman

I live in Orange NSW ULP IS 141.9 DSL is 155.9 doesnt DSL cost about 30% less to make so why does it cost 14 cent more
up untill a few months ago we had 2 people in this town controlling all the fuel outlets
you cant tell me they were not on the phone to each other talking price were was the ACCC and i asked one of them once why is fuel cheaper in there outlets in Dubbo Parkes Forbes West Wylong than in Orange when it all get freighted up here first suprise suprise he wouldnt answer my ?? i dont know about other towns but here in Orange we are getting RIPPED off big time
Im thinking US the poor 4WD owner is also getting touch at the servo to pay for the DSL FUEL REBATE that the farmers and transport people get that moneys coming from somewhere

that my bitch for today

Glenn...
AnswerID: 282088

Reply By: DIO - Thursday, Jan 17, 2008 at 16:13

Thursday, Jan 17, 2008 at 16:13
The sad reality is that the retail price of diesel or anything for that matter has absolutely nothing to do with the initial cost to manufacture or produce.
There is unprecedented demand worldwide for diesel (and other fuels). In any free market supply and demand dictates price. Petrol prices are, I believe, kept artificially low due to the overwhelming number of mums and dads, families etc who rely on it for everyday motoring use. Why don't the oil companies also offer lower prices on diesel? They don't have to because if you or I don't buy it, industry, mining etc will. They won't miss out no matter which way the market goes.
Instead of wasting time trying to lobby oil companies to lower their profit margins, try lobbying the Federal Govt. to reduce fuel excise and stamp duty. Every time the retail prices increase, so do the stamp duty and excise margins. The Govt is on a winner. Enough pressure on them might have them consider such changes. Who knows.
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Reply By: Willem - Thursday, Jan 17, 2008 at 19:35

Thursday, Jan 17, 2008 at 19:35
The Government taxes fuel at 38c/l and then you pay another 10% GST on the whole litre.

So the tax on a litre of fuel costing $1.50 is 53cents.

Industry doesn't care as the cost is borne by the consumers. Food, clothes and everything else goes up and up and up. Pay and pensions lag behind.

1. Drive less or use public transport

2. Walk more and get fit......I'm trying.... I'm trying.... but Oh its so boring....lol


Cheers
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Reply By: Dave B (NSW) - Friday, Jan 18, 2008 at 00:27

Friday, Jan 18, 2008 at 00:27
Glids, after reading your post, I thought I would try and find out what the prices are in Singapore.

Diesel is about 50c (Sing) CHEAPER than petrol according to the Caltex website.

Now I dont know what the taxes are in Singapore as compared to here, but I reckon we are being screwed by the oil companies as well as the Govt. here.

The exchange rate on the Singapore $ today is about $1.28.

Caltex Singapore

Dave
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Follow Up By: Dave B (NSW) - Friday, Jan 18, 2008 at 00:49

Friday, Jan 18, 2008 at 00:49
I just read a bit more on the Caltex Singapore site and they state that the tax % per litre of diesel is 5%.

What is our Governments take on diesel ? About 33% according to Willems figures.

Must finish this and get into the Govt.'s email system now.

Dave
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