Running on Empty?

Could the dream be over? Could the latest surge in crude oil prices eventually push fuel costs so high that grey nomads will be forced off the road? Will the Big Lap become more like the drive around the block?

Australia’s biggest petrol refiner says paying $3 a litre for petrol in a decade’s time is a real possibility. What the blithering bowsers is going on?

In its internal magazine, the Star, Caltex carried a photo showing unleaded petrol at 334.9c a litre and, in the accompanying article, warned that our current fuel prices represented a bargain … and we all had to think carefully about the future.

You’ve got that right! Slower travel may be the best way to go but at those prices we may have to stay in every campsite for a couple of months while we save up for the next tank of fuel. And the pressure on the old fishing rod to perform and thereby cut the food bills is going to be so immense it might take the fun out of it.

Caltex says fuel prices here are substantially less than they are in most other industrialised countries … which is proibably true … but it still hurts.

For the record, the company sets out what the cash you spend on fuel goes on. It quotes the example of a driver in Melbourne swinging into a Caltex station for a $70 top-up. Some $26 of that money will go to the federal government in tax, $36 pays for the crude oil from which the fuel is refined, $4 is for refining, $2 is for wholesale gross margins and $2 goes to the Caltex service station to cover costs and leave a slim profit.

“No one knows for sure where crude oil or refined product prices will be in future, but the way seems to be up,” say Caltex CEO, Des King. “There is general agreement that, to meet increasing demand, conventional oil production will be supplemented by unconventional fuels like biofuels and gas to liquid fuel within the next 10 to 20 years, forcing up oil prices.”

And, he says, carbon pricing to help reduce greenhouse gas emissions will also increase fuel prices with government plans to start in 2010.

Crikey! It certainly isn’t looking good. But what about that other favourite bug bear. How do you explain the sometimes massive variations in fuel prices between different cities and towns?

“In general price differentials in seemingly ‘like’ country towns may be explained by differing local competitive factors, including population sizes, the level of competition and the presence of discount retailers,” says Mr King. “This is consistent with what Caltex has said for many years.”

And there you have it. Obvious, isn’t it?

Anyway, must dash. Got to go check out some possible fruit-picking jobs, maybe a little maintenance work on a cattle station. I don’t know … anything. Three bucks a litre! I’ll be having nightmares tonight.

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