Can Australian find real relief from crippling high fuel costs? Thats one of the great issues facing Australians today. The Government has no effective answer, in fact their plan to introduce emission trading can only increase fuel costs. The best they can offer is a subsidy for hybrid vehicles. Hybrids well always be costly and are at best a conservation measure, expensive petrol is still required. The Opposition proposes a 5 cents fuel excise cut, motorists will welcome the cut but its not a long term solution.
There is a simple answer, not easy, but simple. Stop using petrol. Australians need a real alternative to costly oil fuels.
There are alternatives. Electric vehicles are now coming into production. Advances in battery technology will allow Teslamotors to release its Roadster this year in the USA . General Motors has given the go ahead to the electric Volt and Mitsubishi will release its electric iMiEV.
However alcohol/petrol flex fuel cars are the most practical alternatives today. Flex fuel cars can run on either alcohol or petrol allowing motorist to buy what ever is cheapest. They effectively break the oil monopoly by providing real fuel completion.
Brazil has shown what can be done. During the oil shocks of the 70's the Brazilian government decided to save foreign exchange by moving towards ethanol. The country's sugar industry could efficiently produce ethanol so the government mandated E24 fuel mix then started an alcohol car industry by ordering service station to install an ethanol pump (the petrol station were state owned). It also gave tax subsidies to start ethanol car manufacture. Considering the price of oil at the time the alcohol cars were very popular, about 90% of new cars were ethanol fueled by 1981. However from the mid 80's the price of oil went right down and sugar prices tripled virtually killing the industry. Fortunately for the Brazilians , engineer Fernando Damasceno developed a simple flex-fuel system. In 1999 OPEC increased prices again and in 2001 Volkswagen in Brazil convinced the government to subsidize flex-fuel cars. As they say, the rest is history by 2006 70% of new cars were flex-fueled and all other cars are now being phased out.
If you doubt the wisdom of growing food crops for fuel remember ethanol is not the only alcohol. Methanol is another alcohol fuel and its cheap, it can be produced from hydrocarbons like gas or coal as well as any biological matter from garbage to weeds. In China methanol is already a major alternative fuel. Flex fuel cars can run on methanol as well as ethanol, in fact the first flex fuel cars invented used methanol. However, unlike ethanol, it has the great disadvantage of not having a well organised farming lobby behind it.
The reason we don't have flex fuel cars in Australia is because they are in a catch-22 situation. Service stations don't sell A85 because theres no cars on the road that use it. Motorist will not buy flex fuel cars because theres no service stations selling A85. A way is needed to cut through the hurdle.
That way is to unleash market through a tax cut. Give a GST rebate on all new alternative fuel vehicles sold of up to $4000. Full electric, (not hybrids) hydrogen, those compressed air Noddy cars and especially flex fuel vehicles would all receive the rebate. The government should not been picking winners, although flex fuel cars appear the most practical to me the market should decide. At $4000 it would mean a full rebate on a well equipped family car.
That means flex fuel cars would be cheaper then conventional cars with such a competitive advantage manufactures will have every incentive to market flex fuel vehicles. Even today SAAB has an E85 car on sale, we can expect many more to quickly reach showrooms. Once a critical mass of vehicle is reached on the roads service station will sell E (or A)85 . Assuming oil remains expensive there will be plenty of incentive for owners of conventional cars to convert to flex fuel. At that stage the rebate can be phased out.
The tax cut is certainly affordable, about one million vehicles are sold each year if everyone bought large cars and received the full GST rebate it would cost $4 billion., considering our budget surplus even that would be affordable Of course it will be no where near as expensive as cheaper cars will pay less GST so receive a reduced rebate. Besides it would be removed by that stage anyway.
We can remove our dependence on oil and provide real help to motorist, not by higher taxes or government industry planning but by cutting taxes and providing real competition.
