Price of petrol set to surge

Please provide a cite for this. Good luck finding one ... especially
since I favour public transport, car pooling, low emissions vehicles,
trip consolidation, bicycles -- all of which entail mechanical
transport.

Again, please provide a cite for this. I've never implied such a
thing. The voices in your head (talking watermelons on horseback?)
don't qualify.

Noted: you avoided coming to the defence of "market forces". Why would
that be?
Fran

Because it has nothing to do with your "wish" that fuel be priced out of
reach for us common people.

 

Fran wrote:

Hi Fran.

In answer to your question, not very much.

Much of the petrol used is paid for by some one else.

Prices of almost everything will go up, but, it will have no effect on
motor vehicle traffic at all.

Only poor, unemployed people will suffer.

regards,
CrazyCam

 

I was in NZ last week - petrol there is NZ$1.65 a litre. People I spoke
to said that fuel price didn't affect their use of vehicles, they just
adjusted budget to allow for higher fuel costs.

Bear in mind though that I was in central Otago so there is no public
transport to speak of.

--

 

~~~~~~~~~~~~
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Spafford,1992

 

Initially?

Not much... most people are fairly locked into their existing vehicles.

I'd expect a decrease in use, an increase in car pooling, public
transport, motor scooters, push bikes and walking.

In the medium term I'd expect a moderate increase in the sales of small
and medium cars and in sales of LPG and diesel vehicles.

To create a large change you'd have to double or triple the price of petrol.


G-S

 

I really don't think so Fran, but anyway.

But thick nonetheless.

Kind of amusing really coming from someone who thinks charging people three
bucks a litre for petrol to fund mutli level car parks in residential areas
beside freeways and high density inner city housing is a good idea.

 

That'd certainly bring about change, but whether it was good or bad is
highly debatable

 

Another interesting concession. Alternatives: look like an idiot or
declare my plans make sense.

I can see the dilemma, but you overlooked the third variant: declare
your insight into my claim, and persist in disagreeing on some
substantive basis.

Of course, that would require using your mind, and we can't have that
can we?

Fran

 

Not on a level that you would find acceptable, no.

 

It's already done that in the last few years. And nothing much
happened to the composition of the fleet, except that 'performance'
cars got bigger and more powerful engines using more fuel.

Regardless of the pain of opening your wallet at the Servo, fuel is
the cheapest component of owning a motor vehicle. A vehicle costing
$30K new being driven 12,000 kms per annum (the stated average for
private vehicles) at 10 l/100km paying $1.20 per litre will cost $1440
in fuel. It will cost $500 in Rego fees, $500-800 in Insurance, will
require one service at $250, depreciate by at least 25%, $7500, and
will cost at least $2400 in Finance costs (I have taken this to be 8%
of the $30K you no longer have in Fixed Term Deposit, actual borrowing
will cost more). I won't bother with tyres ($200) and other minor
incidentals, such as RAC membership.

Your total costs are $12,590. An additional $0.50 per litre will add a
whopping $600 to your costs. 4.8%. Whoopee!

Theo

 

That's true. Vehicle purchase carries with it a huge sunk cost, which
acts as a very significant constraint on marginal price sensitivity.
Overcoming that to force a rapid change in car ownership patterns
would require a massive price signal. It's also not clear, at the
margins, that the chaos in the rest of the economy that would follow
something like that would be justified by the advantages, significant
as they would be, relative to a slower but certain and continuous
upward movement in real fuel prices.

So would I. Studies in demand elasticity show that for every 10%
movement in real fuel price, somewhere between 0.22 -->0.6>% of demand
is lost. If the real price margin is maintained, cuts in demand tend
to increase as people see the long term trend as predictive and start
switching to more fuel efficient vehicles as they write off the
residual value of their vehicles. In the case of operators of vehicle
fleets, where the turnover in vehicles is up to three times more rapid
than in the private vehicle market and the cost of fuel is a
significant cost factor, the effect tends to be more dramatic, all
else being equal.

That has already proven to be the case in Australia in recent years.
Sales of large passenger and SUVs have declined relative to sales of
small passenger vehicles and the more cost-efficient diesel vehicles.
The current Ford Econetic being offered on-road at 25k and which boast
better fuel economy than a Prius (Hwy cycle said to be as low as 3.2L
per 100k) will surely sell well.

Not necessarily. To create a *rapid* change you'd need to do that
because in Australia, common vehicle private ownership cycles approach
ten years and very few change in under five. Assuming a commuter
travels 20k in a year and has a car consuming at 7L per 100k -- fairly
mid range -- a 50 cent per litre rise is still less than $14 per week
-- not enough to recover the sunk cost losses of changing to a new
vehicle and also for on-roads, new warranty service costs,
depreciation, higher insurance, interest on loan etc. To overcome that
hurdle you probably are going to have to lift marginal vehicle costs
by closer to $40 per week. If you did though there would still
probably be what analysts call a 'rebound effect'. If a whole bunch of
people essentially write off their sunk costs to buy new and more
efficient vehicles or decide to do without vehicles altogether and
move closer to work or to public transport or whatever, then the
private vehicle market is going to have a glut of less fuel-efficient
cars, which will obviously be a lot cheaper both at wholesale and then
at retail. That would push the total cost of ownership of fuel-
inefficient vehicles in the oprviate vehicle market down relative to
more fuel-efficient ones, since these would be cheaper to buy, easier
to get parts for, cheaper to insure and attract lower debt service
costs. People weigh this against the more costly fuel bills and see
where the true price point is.

A more gradual (but perceived as significant and inevitable) rise in
real prices of fuel would minimise this rebound effect and get people
used to the idea of using cars as a luxury rather than as a banality.
There would be a more orderly and more permanent transition. You'd
probably find that people would live clioser to work and urban sprawl
would be reduced. We'd get more urban consolidation and more efficient
and public transport as we approached population densities of about 80
people per Ha (rather than as at present in Sydney, about 30 people
per Ha)

At 6 cents per litre though (roughly 5%) the principal change would be
around changed vehicle usage patterns such as those you outline above.

Fran

 

You're assuming a level of elasticity that doesn't correspond to the
real world. Not all people can pass on price hikes.

Some people can work more overtime, or pass on increased prices, but
not all can.

One suspects most people will cut back across the board by redcuuing
their vehicle usage in the lowest priority settings, driving more
economically, car pooling and cutting back on other discretionary
purchases.

It's worth noting though that some of this increase would flow back to
the state in revenue, and since they have to spend it on something,
this would tend to support growth.

If there are fewer vehicles on the road at any given time, then those
that are on the road are likely to become more fuel efficient too.

Fran

 

As noted above, I substantially agree that *in the short run* (which
is to say within the cycle in which people trade their cars) 50 cents
per litre isn't going to make a lot of difference. (I'd be surprised
about the 12,000 annual km figure though -- maybe there are some
wealthy inner city dwellers who don't use their cars much, but I'd be
surprised if more than 50% of urban commuters who use their cars o
commute don't approach 20,000km each year). Work it out -- if you live
just 25km from work and go to work and home 276 times per year,
there's 13,800km already. Throw in recreational vehicle use, shopping
etc on weekends @ 40 km per weekend, and there's easily another 2100.
Annual trip to the snow and the north coast for Christmas? Add 2000 km
each. Commuters to Sydney drive from the Central Coast, Wollongong,
Picton and the Blue Mountains. Even Penrith is 50ks out.

Fran

 

Fran wrote:

What you say here may be true in cases where there is some logic applied
to vehicle purchases, but, for male purchasers of vehicles for private,
or "semi-private"(1) use, where the sincere belief that a bloke who
drives any vehicle without having the biggest engine option possible
fitted will suffer his dick shriveling up and dropping off, it ain't
going to work.

Scooters, pushies and walking, yup, I'll believe, but you have to be
joking about car-pooling and public transport.

Most Aussie blokes are far too selfish to share their cars, and, if they
did the show-off crashes would increase by a stupid percentage.....

Some of the women drivers are a bit suss, too!

In most places in Oz, a car isn't a luxury item, it is an essential for
living.

Oh, aye, right..... have you seen the house prices in Balmain?

Eventually, in a generation or two, perhaps you might be right, but,
given public transport is run by a state government (typically) don't
hold your breath until it happens.

(1) By semi-private I mean the sole trader/small business operators who
buy their own vehicles, but have the tax-man subsidise their running costs.

regards,
CrazyCam

 

THANK

YOU

EPSILON!

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responding to a pensioner who dared ask for more.

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"We'll just change it all when we get in."
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That's true, but one suspects that such people

a) are a tiny minority
b) will typically find viagra cheaper than running a fuel-guzzler or
be to broke to give effect to their neurosis

In any event, in recent years even the fairly modest rise in prices
has been correlated with a shift to smaller vehicles.

http://www.rba.gov.au/publications/bulletin/2008/sep/pdf/bu-0908-1.pdf

That's an assertion, but do you have any actual studies that would
bear this out?

In the places most live in OZ, it is both a luxury item and essential
for some of the week. I'm guessing the luxury part will be trimmed
back first.

Balmain isn't part of urban sprawl. It's inner city. Urban sprawl is
40kms out from the GPO ...

Plainly, if population densities rise then there will be scope for
more PT.

Fran

 

Public transport in and around Melbourne and across the state of
victoria is showing consistent growth of between 4% and 8% depending
upon location and mode.

With those sorts of growth rates sustained (and they have been for some
years now) it isn't long before we'll start to see noticable pattern shifts.


G-S

 

You obviously misunderstand.....it is a perception problem....and, yes,
many people will happily go broke to support their warped view of life.

Of course not!

1. this is usenet.
2. I am of an age where I, personally, don't give a rat's arse about the
future, much beyond the next five years or so.

Well, if you have something that is essential for 5 days a week, the
marginal cost of using it just a bit more for "luxury" on the weekend
isn't really that much.

This, by the way, would be a useful area for government intervention, if
they weren't so money hungry!

A transferable number plate, easily moved from a small, economic, one or
two person commuter vehicle, to a larger, family mover type vehicle
could actually make some sense.

Oh, right, aye...... I can see it now, all these middle aged folk
commuting in from Beecroft to the city on pushies in a 40 degree day.

Scope? What does that mean? ...an available gap that local state
government isn't going to fill?

Plainly, there is need for more and better public transport right now.


Is it happening?


Not as such! :-(

regards,
CrazyCam

 

Dunno about Vic, Geoff, but up in Sydney public transport is a complete
joke.

It's badly run, unreliable and over crowded.

Any extra load, as in more users, and the whole system will likely collapse.

regards,
CrazyCam

 

No assumption needed, its historically what happens when prices go up.

Unions will demand and most likely get pay increases which end up
flowing to most workers, increased wages cost will result in employers
putting up their prices.
These things won't happen overnight and there would be a period where
people just wear the increase but eventually it would balance out.

Maybe for a short period until things get back into balance as they will
in a relatively short time.
As someone else already pointed out fuel is only a small percentage of
the total cost of vehicle ownership, keeping a vehicle for 8yrs instead
of 4 would save you considerably more than saving a few dollars per week
by reducing the amount of fuel you use.


Daryl