It’s no surprise that almost 80 percent of voters want the Federal Government to take direct action to cut fuel prices, according to figures from the latest Herald/Nielsen poll. After all, it was the Labor Party which went to last year’s election making bold promises to take action against high housing costs, high grocery costs and especially high petrol prices. While no politician was foolish enough to say that they could actually deliver lower prices, they certainly weren’t shy about giving that impression.
Since the election, all kinds of economic hell have broken loose. Of course the seeds of the United States credit crisis were sown long ago and began to emerge well before the election, but in the past six months it has become increasingly clear that all is not well. Inflation has been identified as a significant threat, not only by our own government, but around the world. Coupled with an economic slowdown which is already gripping the United States and may or may not eventuate here, inflation spells tough times for individual consumers, especially Kevin Rudd’s “working families”.
While inflation is being propelled by a number of factors, it is fair to say that oil prices must be at or near the top of the list. And while Brendan Nelson’s proposal to cut excise is a direct and popular approach to cutting the price of petrol, sadly it would amount to no more than a drop in the oil can. Sadly, the truth is that there is virtually nothing any government can do about petrol prices, except perhaps cut the tax. And while that sounds appealing, it does nothing to address the underlying problem, and does nothing to assist climate change policy.
The government only has itself to blame for raising expectations of doing something to halt the incessant increase in petrol prices. But even worse, if the doom and gloom forecasts of a recession do come true, the government, and the rest of us, will have a lot more to worry about than just the price of petrol.