The recent kerfuffle between the parties over who has the best strategy for cutting petrol prices – the Liberals pushing for “at least” 5 cents a litre cut in the excise, and the government considering lifting the double-tax of the GST on the excise – effectively cutting 3.8c – is astonishing in its short-sightedness.
The Liberals above all are aiming for populism, to say to the people that hey, we’re doing something real about petrol prices. The government appears to be aiming for a pragmatic populism – to say we’re doing something, but we’re not as reckless as the opposition, and we’re doing a “sensible” tax cut. Both appear to fail to acknowledge that the price fluctations could wipe out their cuts in less than a day.
Such crass appeals to populism have also eroded any faith I had in either party’s ability to lead, as it were – it would appear that we are now locked in a permanent state of electioneering, all moves vetted by polling. This permanent state binds the hands of the government to populist moves, and the paranoia of losing even a single percentage point of advantage is clearly so high that policies must be ajudicated on their appeal to the masses.
The current price rise is driven by both demand and speculation, with speculation particularly turning into a nasty feedback loop, but in a market driven economy this something that we must accept. Changing the system to take speculation out of it – effectively killing the futures market – reduces the ability to mitigate risks for many industries, such as the airlines, which would be about as popular as mud pies.
For one, the environment cannot afford petrol prices staying low, and higher petrol prices also encourage innovation for replacements for the primary use as a fuel. Given the number of other petrochemical products we depend on, oil isn’t going to go away as a resource, but taking out use as a fuel would flatline prices, and shift our focus. Innovation is a good thing.
It’s just up to someone with a little power now to show some leadership and accept higher prices cannot be avoided through paltry measures such as a 5 cent reduction in tax.