“Motorists could be pumping cheaper fuel into their cars tomorrow if Australia’s major oil companies started blending ethanol into their fuel,” Leader of The Nationals in the Senate, Senator Ron Boswell said today.
“There is a significant amount of ethanol capacity that could be used to provide price relief to the consumer currently in storage looking for a buyer, but the major fuel companies are not interested in blending the fuel even though it could provide cheaper prices for motorists,” he said.
“Most e10 fuel sells for 3-4 cents a litre cheaper than petrol because, as an alternative fuel, ethanol is effectively free of federal fuel excise. The oil companies need to pass on the price differential and pass the excise benefit on to consumers.
“The ethanol is being stored because companies like Shell, Mobil and Caltex are not making e10 available in the mainstream fuel markets of Sydney and Melbourne.
“Some motorists are getting the cheaper fuel by going to independent retailers, but the opportunity should be available to all motorists,” he said.
Senator Boswell said he didn’t agree that nothing could be done about high fuel prices.
“Ethanol blended fuels are in the marketplace at the moment. I urge motorists to seek those suppliers out and take advantage of the price differential that is usually there.
“The usual economist’s approach of letting the market response to higher prices encourage greater biofuel use is ineffective,” Senator Boswell said.
“A lead-time of two to three years is necessary for the construction of an ethanol or biodiesel plant. Petrol prices fluctuate dramatically in that time and there is limited capacity for the market to respond as quickly as is necessary.
“Governments have a more important role than market forces in ensuring the right policy settings are in place to get the production levels up.
“The current excise free status of biofuels is a positive aspect, but the Federal Government’s target of 350 ML for biofuel usage by 2010 is out of date and needs to be boosted to take into account the current oil shock.
“The initial target was announced in 2001 when the price of petrol was around $30/barrel. By 2010, 350 ML will represent less than 1% of Australia’s transport fuel needs.
”Internationally, strategies are underway to reach targets of 5% to 20% fossil fuel replacement by biofuel.
“Many of the European countries are considering importing biofuels to meet these targets. The irony is that we can produce our own, but don’t seem to realise the urgency of developing a local biofuel market.
“The major oil companies have already committed themselves to distributing up to 532ML by 2010 and the Government’s target should be increased dramatically to acknowledge this higher commitment from the oil companies and send a message to industry, the motoring public and the world that Australia is serious about biofuels and not just paying lip service to the alternative fuels industry.”
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