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Petrol price first casualty of Iraqi war.



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Senator John Cherry Australian Democrats Regional Development and Services Spokesperson

February 12, 2003 MEDIA RELEASE 03/072

Petrol price first casualty of Iraqi war

Petrol prices could rise as high as $1.50 a litre in the event of a prolonged conflict with Iraq, causing economic hardship for regional Australia, according to the Australian Democrats.

Democrats’ Regional Development and Services spokesperson Senator John Cherry said the world oil price had risen from $US25 a barrel in November to a two year high of $US35 a barrel this week, with analysts suggesting oil prices could go as high as $US80 a barrel.

“The London-based Institute of Directors has warned that a prolonged conflict with Iraq could push prices up to $US80 a barrel, with devastating impact on the global economy,” Senator Cherry said.

“Using the rough industry rule of thumb, a $US50 rise in the oil price would result in a 50c a litre rise in petrol prices, which are already over $1 a litre in most States.

“The Institute estimates that soaring oil prices would shave 30% off the US stock exchange, and 2% off economic growth.

“Similarly, Goldman Sachs has warned that a prolonged war could cut oil production by four times the amount of the 1991 Gulf War, slashing more than 1.2% off global economic growth targets.

“Higher petrol prices and lower world economic activity would see Australia’s economy hit hard and regional Australia, already struggling with drought, hit even harder.

“A prolonged conflict in Iraq is not in Australia’s national interests. The economic costs in terms of higher petrol prices and lower economic growth are simply not worth it when the objective of disarming Iraq could yet be achieved by diplomatic means,” Senator Cherry concluded.