Price of Fuel, & Going from Garbage to Ethanol

As if the cost of living needed to be under any more pressure: The price of petrol is out of control – again.

Basic unleaded petrol looks like smashing through $1.50 a litre before the weekend – and you’ve got to wonder where all that money goes. Not to you and me, that’s for sure.

If you took a litre of petrol – let’s call it $1.50 – what’s the breakdown? Who pockets the lion’s share? Who’s getting rich? Because someone is.

Here’s how it works out.

Out of your $1.50, about 62 cents pays for the raw material – the crude oil, Jed Clampett’s ‘Texas tea’ … 62 cents.

The next big chunk of cash goes in tax. Knock me down with a feather. You can just picture Wayne Swan standing there with his hand out, at the petrol bowser. At every servo. Rain, hail or shine. It’s 52 cents all-up in tax - just over 38 cents for the Federal fuel excise, and 14 cents in GST. And four cents of that GST is actually the GST you pay on the fuel excise – that’s a tax on a tax – which never seems especially fair.

You know, if you took the tax off petrol, it’d be less than one dollar a litre. There’s a thought.

Another 31 cents goes into refining and then shipping, de-canting, and road transport to every servo in the nation. Frankly, that seems like a fair bit of effort for just 20 per cent of the total price. 31 cents to turn it from oil into petrol and get it to the servo.

There’s only five cents to go. And the retailer gets that, if he’s not discounting. But even that’s not all profit. Just three per cent of the total price to keep the lights on and the pumps ticking over at the servo. Which explains why they’re always so keen to flog you those two-for-one Kit Kats. Even if, like me, you don’t really appear to be wasting away.

It’s absolutely staggering. The oil industry rips a barrel of crude oil out of the ground 1000 times a second, every second of every day of every year. Each one costs about $1.50. That’s 159 litres in a barrel for $1.50 cost price. And they sell it on global commodities markets for about a 7000 per cent markup. Which sounds like a pretty good business plan to me.

And here in Australia, we’ve got this amazing drinking problem. Out on the road, we consume 30 billion litres of liquid fuel every year – and that means a $15 billion windfall to the Federal Government.

If they put a carbon tax on fuel, and if it’s $30 a tonne, that’ll add another 7 cents a litre in tax. Let’s take a note. Dear Mr Swann, here’s another two billion dollars, with our compliments. Signed, the motorist. PS: We know you need it more than us.

What do you think? Is petrol actually out of control? Is there too much tax? Is there a conspiracy? And if there is, who’s getting rich?

It’s convenient to think petrol’s over the top, but if you live five kays from Woolies, driving there and back to collect the groceries – in air-conditioned comfort – is still only going to cost you $1.50. That’s pretty good value. Especially compared to walking there and carrying the groceries all the way home, in your wheelbarrow. Is it just me, or does that seem like a lot of work just to save a buck-fifty?

Wouldn’t it be excellent if you could just say: Petrol, mate, not interested. I don’t need that stuff any more. It’s been emotional, but I’ve decided to start seeing someone else. I’m running my car on garbage.

It sounds crazy, but hold off on the straight jacket, because I don’t really think it’s warranted just yet. This could actually happen, in the next couple of years. A consortium of five major companies – Holden and Caltex (we know them), plus Veolia (they’re basically the gurus of garbage), together with a lesser-known crowd called Mitsui and a US biotech firm called Coskata – combined, those five are on the cusp of building a revolutionary garbage-based fuel factory here in Australia.

They use bio-engineered microbes that essentially eat garbage and – if I’m reading this right – they poop ethanol, the exact same stuff that’s in the E10 fuel you can pump into your car today.

These microbes basically eat anything society no longer needs: like industrial waste. They love to chow down on agricultural byproducts, the vegie scraps, plastic bags, newspaper. Anything that’s rubbish. Yesterday’s dirty nappies; the State Labour Party. Just kidding about State Labour – I guess even waste-eating microbes have to draw the line somewhere.