Taxes Pump Up The Agony
Illawarra Mercury
Friday January 11, 2008
THE price you pay at the pump starts thousands of kilometres away.
The regional market that supplies Australia's fuel is the Asia-Pacific market, so prices here are related to the Singapore benchmark price.If Australia's petrol and diesel prices were below Singapore prices, Australian fuel suppliers would have no commercial incentive to import to Australia.According to the Australian Institute of Petroleum, the Singapore price of petrol plus shipping costs and Australian taxes represents almost the entire wholesale price of petrol - around 95 per cent.Australian taxes include excise (38? per litre) and GST (10 per cent).The remaining 5 per cent is accounted for by insurance, a quality premium for Australian fuel standards, local wharfage and terminal costs, and a wholesale marketing margin.Once fuel leaves the terminal gate, where wholesale prices apply, extra costs are added on.These are transport costs and the money that goes back to fuel distributors and fuel retailers as profits.Caltex Australia, the nation's biggest oil refiner, had an estimated net profit of between $435 million and $460 million for 2007.Caltex pays managing director and chief executive Des King $1.4 million a year for his services - the best estimation of his earnings until Caltex's 2007 annual report is released.But Caltex spokesman Richard Beattie said it was important to remember only 2.2? to 2.3? per litre across all petroleum products contributed to Caltex's profits.Service Station Association chief executive Ron Bowden said that other than Queenslanders, who receive a subsidy from their state government, the main variation in prices between other states is down to competition.Average figures from last week show that NSW, which paid 141.1? a litre for petrol, had the third highest prices in the country, behind only Tasmania (142.0?) and the Northern Territory (148.4?)."Generally there is enough competition in cities to keep prices steady but from time to time in areas like regional NSW it can be different," Mr Bowden said.
© 2008 Illawarra Mercury