Living In A Fuel's Paradise  

Hugh Saddler writes in today's Herald that the calls to cut taxes on fuel as prices rise should be ignored and that the correct response is to provide better public transport.

Most oil experts think that over the longer term there are few if any untapped resources that are large enough to support a substantial and prolonged increase in supply. This means that the present price levels are more likely than not to be the norm, unless or until the world as a whole substantially reduces its demand for oil (a most unlikely prospect).

In these circumstances, cutting petroleum product excise to reduce the retail price of petrol sends the very worst kind of signal to consumers, and is the very worst kind of short-term policy populism. Governments should recognise that for some, perhaps many, years there will be no easy technical fix to provide an alternative to petroleum as the main energy source for road and air transport.

What they need to do is help consumers to adjust to higher prices and use less oil, by using more efficient road transport and by changing their travel behaviour. It is important to realise that road transport accounts for 56 per cent of Australian petroleum use and more than half of road transport fuel use is in private cars and light commercial vehicles in urban areas. So transport in our major cities needs to be the focus of policy change.

The Commonwealth should change its taxes which favour large four-wheel-drive vehicles over smaller cars, and private and road transport over public and rail transport. State governments should spend relatively less on roads, much more on providing effective public transport alternatives to private car use and explore other options to reduce people's dependence on individual use of private cars. What will be good for Sydney will also be good for the country and the world.