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Pumping for petroleum sector reform.



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Media Release The Hon Ian Macfarlane MP Minister for Industry, Tourism and Resources

7 May 2003 03/081

PUMPING FOR PETROLEUM SECTOR REFORM

As work continues on a new National Oilcode for the downstream petroleum sector, Australian motorists are beginning to benefit from a re-balance of world crude oil supplies and prices.

Federal Industry Minister Ian Macfarlane will this month finalise, with industry leaders, a framework which will reform the retail petroleum sector.

The Code proposes improved transparency of petrol prices at the Terminal Gate. It also proposes a simpler dispute resolution procedure, minimum standards for petrol re-selling arrangements and repeal of the Petroleum Retail Marketing Sites and Franchise Acts.

These changes also ensure all customers are better informed about Terminal Gate Prices (TGP) and have the option of buying petroleum products at TGP based prices.

Retail petrol prices are influenced by variations in the price of crude oil that has risen substantially in recent times because of a number of factors including:

• Concern over possible, and continuing, military action in Iraq; • The crippling of Venezuela’s oil output; • Cold weather conditions in the Northern Hemisphere; and • Unusually low world oil stocks.

As a general rule, a $1 rise in the price of a barrel of crude oil produces a $0.01 rise in the price of a litre of petrol in Australia. The Howard Government expects that as crude prices fall, those savings will be passed onto the consumer at the petrol pump.

Since mid-March a decrease in the price of crude oil has been evident. This follows the end of military action in Iraq and the correction of the Venezuelian supply outages.

Crude oil prices have fallen to US$24.34 (A$39.07) per barrel, from a peak of US$34.57 ($A57.19) per barrel in late February 2003. This reflects a fall of 32 per cent in the price of crude oil over three months.

Data from Fuelwatch reveals that from March to April the average Australian price for unleaded petrol fell from 98.0c to 87.9c, around 10.3 per cent.

According to the International Energy Agency, Australia currently has the third lowest retail price for petrol and fourth lowest retail price for diesel among OECD countries.

Media Contact: Kirsty Boazman, (02) 6277 7580, Mobile: 0412 171 444 Email: kirsty.boazman@industry.gov.au Web site: www.industry.gov.au

CMR03-095