Energy Statement points the way towards a sustainable industry

AIP members welcome the Australian Government's Energy Statement as a sound basis for the downstream petroleum industry to address its future challenges.

Recognition of the national contribution of the industry and the need for a long term, stable policy framework as an essential element of a sustainable industry, are especially welcome. The downstream petroleum industry looks forward to bi-partisan support for these broad energy policy settings and the achievement of a national approach to fuels policy.

The Energy Statement identifies the gaps in current policies and stresses the importance of competition, investment and technology in maintaining high levels of supply reliability at a reasonable cost to the consumer in accordance with community expectations on environmental performance.

This coordinated approach to policy development has already proved beneficial to the Australian community in the introduction of cleaner fuels standards. The downstream petroleum industry will spend up to $2 billion to meet the standards that will deliver significant environmental benefits through cleaner urban air and facilitate the introduction of new, cleaner and more efficient engine technologies. The incentives announced last year will encourage the early production of cleaner fuels.

In the Australian retail petroleum market, the oil companies, supermarkets and independents are all vying for market share. AIP members are pleased that the Energy Statement recognises the intense competition at each level of the distribution chain. As a result, Australians have for some time enjoyed among the lowest prices of petrol and diesel in the OECD which underwrites the competitiveness of fuel intensive industries such as farming, mining, transport and construction.

We support the proposition that vigorous competition and a "light" regulatory environment will drive innovation and provide the best outcomes for consumers. The policy framework outlined in the Energy Statement should ensure that the future of the downstream petroleum industry in Australia is sustainable. AIP is encouraged that the government is not seeking to protect sectional industry interests from the effects of healthy competition.

AIP members look forward to early reform of the retail petroleum market. The changing structure of the retail petroleum market continues to highlight the absurdity of the Sites and Franchise Acts that discriminate against some market participants while offering no protection to independent service station operators. From the industry perspective, a more market realistic policy would see retail petroleum market issues dealt with under the general provisions of the Trade Practices Act, and the Sites and Franchise Acts repealed immediately.

The Australian downstream petroleum industry competes with other regional locations and other energy projects for investment. It is important that the Australian Government continues to emphasise the need for a positive investment climate for energy projects in Australia.

Specific policy actions such as the ongoing reform of the excise and grants systems for petroleum products and incentives for the early production of cleaner fuels reinforce positive perceptions of Australia as an investment location. The measures announced for greenhouse gas abatement also demonstrate a commitment to practical environmental measures which seek to minimise the costs to industry.

AIP looks forward to working with the Australian Government and state governments to implement the measures announced in the Energy Statement and to continue the process of downstream petroleum market reform.

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