| 02.01,12. 02:46 AM |
Unleaded ban expected to cause rise in fuel prices
January 2, 2012
NSW drivers could face more petrol price rises this year after the government bans regular unleaded fuel, pushing up demand for ethanol-blended and premium unleaded fuel, the industry has warned.
From July, petrol stations will no longer be permitted to sell regular unleaded petrol, because the government wants to promote renewable biofuels.
To meet demand, the state's only ethanol distiller, Manildra Group, will need to increase its production of ethanol-blended petrol to 300 megalitres by July, up from 250 megalitres last financial year, according to Ecco Consulting, an energy advisory firm.
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''We believe demand will exceed supply,'' Jamie Jardine, a spokesman for BP, said. ''Consumers, particularly in rural areas, will have to pay more.''
Manildra did not return requests for comment.
An Australian Competition and Consumer Commission report on the issue last month warned of a ''significant impact'' on consumers, particularly those forced to pay for the much more expensive premium unleaded petrol if their cars cannot run on ethanol-based petrol, which is the case with all cars made before 1986.
The ACCC also warned of a potential national shortage of premium petrol.
In October, the government required 60 per cent of all fuel be ethanol-based. Current and former state governments had previously delayed the quotas because of concerns about the availability of ethanol fuel.
Mike Cochran, a director at Ecco, expects Manildra can produce enough ethanol petrol to provide for the government's target to be met by July. ''But it's cutting it very fine,'' he said.
Even if ethanol supply falls short, petrol would not be rationed. Under biofuels legislation, the government can give suppliers exemptions that allow them to sell regular petrol.
A spokesman for the Energy Minister, Chris Hartcher, said the government expected industry to meet targets but had granted exemptions in the past and would continue to consider them.
But there are concerns that ethanol-based fuel is becoming more expensive.
The ACCC found ethanol was increasing in price relative to regular unleaded petrol. Last year ethanol was 2.6¢ a litre cheaper; this year the difference fell to 1.7¢. Some motorists argue ethanol is already functionally more expensive because it provides less mileage than regular petrol. The NRMA says ethanol-fuel is between 1 and 3½ per cent less fuel efficient.
David Zsynzcak, of Dalby Biorefinery in Queensland, said his company supplied ethanol-blended fuel for 4¢ a litre less than unleaded petrol at some Sydney petrol stations but others did not pass on the discount. ''Clearly the majors are doing anything they can to stop ethanol,'' he said.
But the industry says consumers might also choose premium petrol in preference to ethanol, which might raise the price of premium fuel.
''Ethanol has proved very unpopular with customers,'' said Paul Zennaro, of Shell, which says it supports ethanol fuel but not through a mandated quota.