Downstream Petroleum 2005

The Australian Institute of Petroleum (AIP) today released Downstream Petroleum 2005, the new edition of AIP's biennial publication on the state of the Australian downstream petroleum industry.

The Executive Director of AIP, Dr John Tilley, said "Downstream Petroleum 2005 will increase public awareness about the downstream petroleum industry, the challenges we face, and the importance of the industry to Australia's economic prosperity."

"The high levels of competition, efficiency and supply reliability in the downstream petroleum sector mean that Australians continue to enjoy among the lowest prices for petrol and diesel in the OECD," Dr Tilley said. "This performance also underpins the competitiveness of other key Australian industries such as farming, mining, transport and construction".

While Downstream Petroleum 2005 indicates a more positive outlook for the industry, based on recent financial and business performance trends, it also highlights the continuing challenges confronting the industry including:

• responding to international price and supply pressures
• meeting the tougher 2008 and 2009 petrol and diesel standards
• maintaining high levels of supply reliability in Australia
• achieving and implementing regulatory reform of the retail petroleum market

"Continued strong growth in Asia and a reduction in excess refining capacity, are likely to remain strong influences on the Australian petroleum industry and on fuel prices over the medium term," Dr Tilley said.

Australia is also part of the global trend to cleaner fuels, and domestic refineries are making investments of over $2 billion to implement tougher new fuel standards under the Australian Government's cleaner fuels program. "Implementation of this program, in combination with more efficient vehicle engine technologies, will improve urban air quality through significant reductions in vehicle emissions and will help reduce greenhouse gas emissions," Dr Tilley said.

Australian consumers continued to enjoy very high supply reliability in 2005, despite significant global oil and product supply disruptions. "The Australian petroleum industry has an internationally enviable record of reliable supply to its customers, despite the unique challenges in distributing fuel across our vast country, and maintaining this record is a high priority," Dr Tilley said.

"Rapid changes in the retail petroleum market, such as the emergence of the supermarket alliances which currently handle almost 50 per cent of petrol sales in metropolitan areas, means market reform is now imperative," Dr Tilley said. The Sites and Franchise Acts create a competitive disadvantage for the four refiner marketer members of AIP, discriminate against some market participants, offer no protection to independent service station operators, and create compliance costs and uncertainty for business.

Dr Tilley said "The retail petroleum market reform package committed to by the Australian Government will maintain and increase the rights of small business, remove barriers to greater competition in the retail market and provide increased transparency and competition benefits to consumers. Market reform will bring benefits to the Australian community while encouraging and supporting the small business sector".

Downstream Petroleum 2005 is available from the AIP website at: www.aip.com.au/pdf/Downstream_Petroleum_2005_Report.pdf

Media Contact:      
Dr John Tilley
Executive Director, AIP
(02) 6247 3044