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The price of oil



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July 23, 1979

South Australians had to face up to the inescapable fact

that the days of cheap petrol were over, the Minister

for Administrative Services, John McLeay, said this w e e k .

Mr. McLeay said no-one liked paying more for petrol, .

but no-one liked being without petrol either.

"This is why the Federal Government has decided that we

must pay realistic prices for oil produced in Australia,"

Mr. McLeay said. . ■ · _ ; ■ . . ’ λ , ■ ■ · .

"If the Government had failed to take the difficult but

correct decision on oil prices motorists would have been

living in a fool's paradise. .

"The simple fact is that while Australia now produces

70 per cent of crude oil requirements, the life of known

reserves of locally-produced oil is limited. '

"Every barrel of Australian-produced oil we use has to be

replaced and unless exploration is encouraged and is

successful it will have to be replaced by oil bought on

the world market. . .

"Australia will soon face a bill for its oil imports of

$2 billion a year, but this figure would have been

considerably higher had the Government not adopted ' / t .

policies which increased our oil reserves and encouraged

conservation." . . .

\ ' . . ·' . ' ' ; \ .

Mr . McLeay said that while the rest of the. world had been

facing up to the fact that the days of cheap energy were

O ver, Australians in recent years paid less than half of

the world price for Australian produced crude oil.. ■

This encouraged waste of a vital energy resource and

meant there was no incentive to explore for more oil

in Australia or to find more efficient energy-using .

processes and technologies.

Mr. McLeay. said the Government worked out a formula

for the new price of Australian-^produced oil based on

the price of Arabian oil at the official selling price

in the Persian Gulf with allowances for freight and

quality differences.

"This is a fair world price," he said. .

And because the Government was in control of the situation,

Australians would not be victims of the extremes of the

oil price market.

In fact, the prices would be adjusted every six months in

line with what t h e ;Government considered reasonable world

price movements.

Mr. McLeay said that while a large part of the increased .

revenue from the oil price increase in Australia would go

to the Federal Government, this would provide the

Government with the means to pursue its energy and other

policy objectives.

The Government had active programs on energy research and

development and had committed $15 million this year for

additional support of energy research and development.

The .alternative to the Government's oil pricing policy would

be to allow domestic oil 'reserves to run down and face an

increasingly heavy bill for imported oil.

■ . ' ' .; k ·

This would mean that foreign governments would reap the

gains from the price we paid for that imported oil.

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