aus recession risk-mining- carbon tax gillard, page-23

Hi WebSpyda,
The price of diesel is benchmarked to the Saudi Arabian refinery wholesale
price with add-.ons for shipping, insurance storage and distribution. This sweetheart deal was struck with the oil companies by by the Howard Government
in 1997 to keep diesel pricing outside the aegis of the Trade Practices Act.

A similar deal was struck on petrol but this was based on the Singaporean
Oil Refinery wholesale price + the add-ons.

IMO these benchmarks are suspect because they can be manipulated to
maintain high Aussie prices at the pump. For example, one can buy unleaded
petrol for export from the Singaporean refineries lower than the official
wholesale price of the day.

The local check on this pricing system is the profitability of Caltex who
refines locally. The former treasurer, Mr Costello, maintained that if the benchmarks were either too high or too low, it would be reflected in Caltex's
profitability. Unlike others, Caltex buys in its crude oil for local refining
and is not a producer of crude oil.

This sweetheart benchmark deal seems to be benefitting the oil companies
because, since its formulation in 1997, there has been no cribbing by the oil companies abouit price. Since then there has been a few petrol pricing inquiries but due to the benchmark being set overseas and outside the juristriction of the ACCC, these inquiries were limited to domestic distribution and retail only.

It is ironic that Auistralia was a net exporter of crude oil up to about 2000 (when crude oil was sub $20/bbl ) and once the crude price spiked in price post Sept 11 2001, we suddenly became a net importer of crude oil.

As Aussie refineries close down we can expect to pay more for our petrol & diesel.

We now need a ACCC inquirt to cover all aspects of oil supply and pricing
including the externally set benchmark. The ACCC could start by recieving mystery shopper wholesale quotes from Saudi Arabia and Singapore to test the
"official" wholesale pricing on which our fuel prices are based.

With kind regards
Moorookamick