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Legislative Assembly for the ACT: 2001 Week 3 Hansard (7 March) . . Page.. 821 ..

MS TUCKER (continuing):

However, this type of inquiry is quite narrow as it does not address the environmental and social implications of our society's dependence on petrol as a transport fuel and the adverse environmental impacts of the use of petroleum products, such as greenhouse gas emissions and air pollution. There has been much national debate recently about increases in petrol prices, and there have been calls for the federal government to ameliorate increases by reducing fuel excise.

For once I agreed with Prime Minister Howard when he originally said that he would not intervene in petrol prices. But it is quite disappointing that he recently caved into populist calls for cheaper petrol by announcing a reduction in fuel excise and the dropping of future indexation of fuel excise. I feel that Mr Rugendyke is also responding to populist calls for cheaper petrol by initiating this inquiry without looking at the issue in its broader context.

While there may be some short-term fluctuations in the price of petrol, I believe there is only one way the price can go, and that is up. I am sure that we would all like many more products and services to be cheaper, but it has to be recognised that in a competitive market prices are set by the balance between the supply of and demand for the particular product or service. On the supply side, the sources of oil are restricted to a few countries in the world, and the major oil-producing countries work together within OPEC to control supply levels to keep prices high.

There is also the long-term issue that we are running out of easily accessible sources of oil around the world, including in Australia. There have not been any finds of major new oilfields for many years, and there are reputable predictions that we will soon be reaching the peak in world oil production. Australia will have to increase its imports of oil to meet local demand, which will put further pressure on our balance of trade. With these restrictions on oil supply, the price of oil will remain high, despite any further attempts by the United States to invade the Middle East to control their oilfields.

On the demand side, oil companies have a virtual monopoly on the supply of transport fuel. There are some alternative fuels available, such as compressed natural gas and methanol, but the markets for these are totally overwhelmed by the petrol market and there is hardly any distribution infrastructure for these fuels. In rail transport there is the use of electricity, but in Australia investment in new rail infrastructure has lagged significantly behind investment in roads.

On a positive note, motor vehicle companies are investigating new fuels for their vehicles, because at least they recognise that petrol is a declining resource. The most promising one at the moment is hydrogen, which will be used to power fuel cells rather than internal combustion engines. However, it will be about a decade before we see production models.

Because of the relative cheapness of petrol in the past and the corporate might of the car industry, we have seen our cities being restructured around the use of the private motor vehicle, with the spread of freeways, arterial roads and low-density suburban sprawl. Canberra is a particular example of this because its main expansion occurred in the 1960s and 1970s, when this style of urban development was at its height. At least other cities have their older public transport networks, such as trains and trams, to provide an alternative transport network, and some cities are investing in new light rail systems, but

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