The Guardian October 4, 2000


Blockade highlights oil's super-profits

by Peter Mac

Truck owner-drivers in Victoria and Queensland have ended their blockade of 
oil terminals, organised by the Transport Workers' Union in protest at 
rising fuel prices.

The 10,000 truck owner-drivers are being squeezed mercilessly between the 
oil companies and transport companies to whom they are contracted. As a 
result, drivers are now forced to drive ever-greater distances, increasing 
the risk of accidents and separating them from their families for long 
periods.

Many are earning only a subsistence income, or just enough to meet debt 
repayments. The number of trucks being repossessed is rising.

The drivers have demanded a Commission of Inquiry into their industry, and 
have pointed out that the oil companies simply pass on the rise in crude 
oil prices rather than absorbing any of the extra cost in their massive 
profits.

Predictably, Prime Minister Howard has described the blockade as 
irresponsible, and has refused to support the drivers' call for a national 
code of conduct.

Federal Treasurer Peter Costello stated that excise cuts are not justified, 
because revenue from other taxes (unspecified) has actually fallen in the 
wake of the crude oil price rises.

Minister for Industry, Senator Nick Minchin, has actually claimed that the 
oil companies are not making sufficient profits, and has called for a 
merging of Australian oil refineries in order to increase their 
profitability!

This proposal, originally put forward by the oil companies, was rejected by 
the Australian Consumer and Competition Commission (ACCC) as likely to 
hinder competitiveness.

The Democrats' recent call for the ACCC to be empowered to split the oil 
processing and retail businesses, together with stringent new requirements 
for cleaner fuel and emissions, led to the Minister's revival of the merger 
proposition.

He accompanied his statement with the threat that without mergers the oil 
companies might close their Australian refineries and import fuel from 
overseas.

Of course, he justified the merger proposal in terms of potential job 
losses from plant closures, even though retrenchments and closures would 
inevitably follow any such merger.

Despite the Federal Government's refusal to freeze the excise, the Western 
Australian Premier, Charles Court, has now called for the Federal 
Government to forego GST revenue in order to fund a freeze on the next rise 
in excise, due in February 2001.

Victorian Premier Steve Bracks promised to raise the issue of a national 
driver code of conduct, including minimum rates for drivers, at a 
forthcoming meeting of Federal and state leaders.

The freeze is also supported by some conservative backbenchers worried 
about a backlash from their rural constituents. State Premiers are to raise 
the issue at the next meeting of Australian government leaders, on November 
3.

However, even if the Federal Government could be persuaded to cut the 
excise, it is doubtful whether this would ease the fuel price burden on 
owner-drivers and others.

The government actually cut the excise on diesel fuel by 24 cents to 20 
cents recently, but the oil companies then raised the diesel price, which 
is now 10c dearer than petrol, compared to 10c cheaper previously.

A spokesperson for one of the companies explained bluntly that they were 
simply taking advantage of a market opportunity, as "Diesel is in short 
supply across Asia-Pacific region".

A code of conduct, on the other hand, at least has the potential to force 
(if compulsory) transport companies and their customers to pay a reasonable 
rate to drivers.

It remains to be seen how much support this receives when state and federal 
leaders meet on November 3.


Crude oil has risen in price from $10 to $35 per barrel over the last few years. While this will be a significant burden for developed countries, it will be a crippling blow to the developing nations, some of which are likely to experience galloping inflation as a result. Radio Havana recently commented that "... the vast majority of the world's population will be the most affected by this new dilemma, which has now been added to their innumerable economic problems. The possibility of surviving in today's globalised world is ever more difficult for the Third World watching helplessly as the free market takes hold even of the power to determine a country's destiny."

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