Henry has been
busy attempting to call the Lodge all morning, but the line has been
engaged, after Prime Minister John Howard said yesterday “If anybody says
there’s some magical solution to the high price of petrol in Australia, will
you please ring the Lodge and I’ll spend an hour, all ears, listening to them”.
Henry’s suggestion is for the PM to fill up the Commcar on Tuesdays, and avoid
long weekends – although he’s sure the ACCC beat him to the
punch.

However, on
political grounds, the PM’s concern is certainly justified, with a recent Morgan Poll finding rising fuel prices are causing financial hardship for one-in-two
Australians, including serious hardship for 21% of Australians. The RACV have
advocated getting rid of GST on petrol, as well as cutting the fuel excise by
ten cents a litre – both exceedingly expensive options. Just how worthwhile
would such moves be?

The Morgan Poll
found that, despite the financial hardship, only 10% of Australians with a
driver’s license are going to drive less than usual due to petrol prices,
including just 4% who say that they are cutting back specifically because of
petrol prices. 76% said they would be driving about the same, while 11% said
they would be driving more in the coming weeks.

From Henry’s
viewpoint, the two possible reasons that Australians aren’t cutting back their
driving are: a) Australians love their cars and find it difficult to cut
down on driving; or b) We’re all getting used to factoring in higher petrol
prices into our budgets, regardless of how annoyed we are while filling
up.

But there is a
tipping point. On average, Australians say they would significantly cut back
their driving once petrol hits $1.73 per litre. Comparing this to the US, where petrol prices are currently averaging US$3 per gallon (or A$1.04 per
litre), an ABC News/Washington Post poll found the tipping point is US$4.16
per gallon (A$1.44 per litre). The tipping point therefore is around 30 cents
away for both the US and
Australia, a level that may be
reached with $100-a-barrel oil.

Currently,
however, the driving public seem to be dealing with high petrol prices, and
therefore to undertake a policy that would strip millions from the national
budget would be a risky manoeuvre. The best the PM can do is sound concerned
and willing to listen to the electorate, which is precisely why he is manning
the phones in the Lodge.

Read more at
Henry Thornton.