Record high oil prices alone will fail to curb an increase in greenhouse gas emissions from transport fuels, according to the Australia Institute, a Canberra-based think-tank.
The Canberra-based institute has analysed a paper released by the Bureau of Infrastructure, Transport and Regional Economics (BITRE), which modelled the relationship between demand for petrol and changes in price.
Executive director of the Australia Institute, Dr Richard Denniss, said the result showed that while higher prices marginally reduce demand, other effects such as population growth and economic growth were more important determinants.
“Higher petrol prices are making people think twice about how much petrol they are using, but the latest numbers from the Government show that there is no doubt that demand for petrol and greenhouse emissions from transport will continue to rise regardless,” he said.
“The Federal Government used the increase in the world price of oil to justify insulating the petrol price from the impact of emissions trading, but the Government’s own figures show that this will not be enough to reduce the demand for petrol year after year.”
The BITRE paper said for every 10 per cent increase in the price of petrol, demand would fall by only two per cent.
Dr Denniss said this meant unless petrol prices increase by around 16 cents per litre per year, greenhouse emissions from passenger cars will continue to rise.
“If the government’s strategy is to simply rely on rising world oil prices to curb Australia’s demand for petrol then it is likely to fail.
“To tackle climate change petrol needs to be included in the ETS, we need to end the subsidies to large cars and 4WDs and we need some serious investment in public transport. It’s not rocket science,” he said.