John Quiggin thinks that Labor’s descent into the petrol pricing abyss – with all sorts of speculation about GST changes – is the Labor party’s first big public policy disaster of the term. Perhaps unsurprisingly, it’s also led to the first big damaging leak of the term – Martin Ferguson’s letter opposing Labor’s Fuelwatch scheme.
Trevor Cook speculates on the motivations of both Ferguson and the leaker. The other point I’d add to his analysis is that it wouldn’t be drawing too long a bow to suggest that Ferguson is the one spectacular example in the Ministry of “interest group capture” – a Minister who sees his role as being to represent industry to Cabinet rather than to make public policy in the public interest. If anyone had been running a book around election time on frontbenchers most likely to kick own goals for the Rudd government, I suspect Ferguson would be right up there with Peter Garrett – though for somewhat different reasons.
Cross-posted at PollieGraph.
I’m not sure it’s all that much of a public policy disaster, Mark. Prices will come off and all will be forgotten. There’ll be little to no change to excise or GST arrangements in relation to fuel. I seem to recall this kind of pressure being heaped on Howard/Costello (a few?) years ago. In the meantime, the hopeless bungling of the ALP on this will keep the journos busy, but with little long-term effect, either on public policy or the ALP’s commanding electoral position.
BBB
Yes, perhaps “potential” public policy disaster might be a better way to talk about it, BBB. But I don’t think Labor is doing itself any favours by touting some sort of tax change that will never happen in all likelihood. It appears to be a knee-jerk response to Rudd’s own “done everything we could” comment. It’s damage control spin, but it’s damage control spin that undermines the credibility of the government’s main message – Liberals irresponsible, problems can’t be magically solved, etc. They need to learn to hold their nerve. They’re not in opposition any more.
I agree Mark it certainly looks like a case of interest group capture
Let’s hope they learn the lesson. I’ve been distinctly unimpressed with the last two months (as opposed to the first four) – there’s a kernel of truth to the “policy on the run” stereotype coming out of Nelson and it’s starting to look like the Liberals stumbled onto a toe-hold with petrol pricing. They can even spin it to be “liberal” by pointing out that it’s a tax cut. However, given them another week on it and they’ll screw it up somehow.
The Liberals haven’t “stumbled” onto anything, David. The “we care about grocery and petrol prices and we’re going to have this and that inquiry” line adopted by Rudd prior to last year’s poll was a carefully constructed strategy designed to fool the public into believing that the Federal Government could do something about high prices, without actually making any real promises. Extremely effective in the short-term, it nevertheless had post-election disaster written all over it. Blind Freddy could see it was all going to come back to bite the ALP, and the Parliamentary Liberal Party, while perhaps only marginally more insightful than a Blind Freddy, was onto it from the very beginning.
BBB
Here’s another interest/industry group Marn speaks for: brown coal power generation in the Latrobe Valley. Recently he visited the Valley to announce big $ for “clean coal technology research”. The articles in the local “Latrobe Valley Express” were entirely about saving the jobs of those working in and around the mines and power stations. This included direct quotes from Marn.
Nothing about how likely the carbon capture idea was to come to fruition, or its costs. Nothing about an overall energy policy (unlike Mr Rudd who mentioned “energy security” on Q&A). Some money to HRL Technology (local research company) for their fluidised bed technology project; which is about 10 yrars old now.
To me, it read like a “jobs for the boys” spiel, not forward-looking or strategic. Don’t worry, Latrobe Valley unionists: you have jobs for life, with Marn.
Ok, we all know Marn is a dangerous fool who is flat out counting past ten, but this may be the first sensible thing he’s said in a long time — Fuel Watch is an anti-competitive waste of money.
Now if we can just get it through Marn’s thick head that coal is not our friend…
It might be a damaging leak, but the story is a total beat up. I’ve written about it here. In fact it is a bit of a classic: dredge up old story and rebadge it (admittedly with some new info); then get Minister to repeat comments about supporting party policy; then run headlines calling it a backflip.
Perhaps one good thing might come out of this : Rudd might, and I say, might, use it as an opportunity to de some very necessary house-cleaning of dead wood on his front bench :viz, Ferguson and Garrett.
OTOH, the bad thing that comes out of it is the potential tarnishing of the Rudd Government’s reputation for not using the same weasly words tactics as Howard. And that is vrty bad. Because one of the things Rudd’s gavernment had really going for him was its honesty or at least, appearance of honesty. Though I disagree with the comments on another blog that we’re back to Tweedle-Dum and Tweedle dee. It’s not that bad. Yet.
I’m inclined to think that a politician communicating concerns to their party about policy direction is a good thing. I think I’d be far more concerned if all party members just nodded in zombie-like fashion and accepted whatever the main players decided, rather than thought about an idea and weighed up its pro and cons. I realise general consensus is important, but surely the relevant minister can express his/her opinion?
CFQ, Carbonsink, and Tim collectively make an important point. Let’s not fall into the trap of believing that it’s necessary or desirable to have ministers agreeing on everything 100% of the time. It’s healthy for ministers to disagree on things sometimes. In fact, it’s been a worry that there hasn’t been enough signs of healthy debate in the Rudd government yet.
Carbonsink (and Martin Ferguson) are also quite right: this policy isn’t the no-brainer it’s being made out to be. Frankly, I suspect the real appeal is that it means people won’t feel aggrieved about “missing out” when they drive past cheaper fuel after filling up. The miniscule drop in margins is neither here nor there. In any case, if you cut the margins on petrol retailing, the money will come from somewhere; there’s not much fat in the petrol retailing game to cut AFAICT. My guess is that the price of the other junk the petrol stations sell – chips, drinks, caps warning that this vehicle is indeed frequently sideways – will just go up to compensate.
“c) some bureaucrat is outraged by what they see as a stupid policy and wants to undercut it…..” said Trevor Cook.
The most likely mole!
You would need to be the worst type of labor traitor to hand something to the Opposition Organ. It is surprising how the government has lasted so long without such a leak. And a good warning to watch out for staff who have loved John so long and so well and for Mart the fart to use paper, for one purpose only.
Oh Robert you’re clearly not informed as to who we need to blame for our petrol price predicament.
In order of evilness we have:
1. Greedy Big Oil.
2. Greedy ‘price gouging’ servos
3. Greedy governments with those tax-on-a-tax taxes
4. Greedy Saudis keeping all their oil in the ground deliberately
5. Greedy oil market speculators
6. Greedy Chinese for daring to wanting to live like we live
7. Do gooder environmentalists not letting the oil companies drill where they like.
Did I forget anyone?
Note: No mention there of incredibly energy-profligate western lifestyles.
carbonsink wrote:
I know that the post was somewhat tongue-in-cheek carbonsink, but there’s some credible evidence floating around that suggests the saudis can’t pump any more oil than they currently do. They’ve been asked a few times by BushCo to do it, and even lied a couple of times that they’d done it, but careful tracking of their exports showed that they peaked a couple of years ago and are struggling to keep up. It’s only going to get more expensive from here on in.
In terms of conspiracy theories, I quite like the idea that the US invasion of Iraq wasn’t to secure oil, it was to take it off line for a while in order to make it last a bit longer. I don’t believe it though.
Yes Matthew Simmons has devoted the last 7 or 8 years of his life to promoting this theory. My guess is the Saudis probably could pump a bit more but they:
a) can see the writing on the wall and want to keep some for future generations
b) don’t want to damage their oil fields by pumping too hard, because by pumping too fast you can reduce the total amount of oil recovered.
That’s the problem with unsustainable shit – its expensive.
I reckon Rudd had the politics right when he mumbled something about Iraq war raising prices, and was otherwise ignoring Nelson’s rubbish.
This Website is fascinating, (although I’m not sure Mar’n Fer’sn reads it) – it sure set me straight from the fantasy about “texas tea”, Beverly Hillbillies and the guaranteed thump down oil prices are supposed to get once the speculators stop speculatin’. I’m seriously starting to worry about how I’ll oil the chain on my bicycle, let alone fill up Gaston the Truck.
Oh I don’t know, I think Marn could be a bit of a peak oiler, but of the we-must-make-more-oil-at-the-expense-of-everything-else vareity.
Satellite o’er the Desert is run by “JoulesBurn” a regular at TOD. Big Gav (an Aussie) has been following it as well at Peak Energy.
Interesting to see some comments about policy on the run and knee jerk reactions when there was a video clip on last night’s news showing Cris Bowen on the 15th May (before Nelson’s budget reply and 5c cut in fuel excise tax announcement) saying that Labor’s tax overhaul inquiry would include looking at removing the GST on fuel excise.
For me, it would be appropriate that someone as unimaginative as Marn would be pinged, at the same time as his soul mate Lennon is ousted down in Tassie.
If Marn is an example of teh left, i’d hate to think how iemma and the nsw righties would be regarded by a sane person. As for that cretin Nelson, bbb, lets not even mention him…
Marn is, and always has been, a plodder. He is a testament to the personal rewards of indefatiguable attention to the entitlements ‘owed’ factional hacks and loyalist union leaders, and to the policy limitations that emerge once they get to any kind of position where thinking, as opposed to performing, is required. He is a predictable embarassment.
Hell, HP@19, you would not want the “facts” to get in the way of another msm beat up.
It seems perfectly reasonable that the part of the GST, that has increased largely as a percentage, because of the dramatic increase in fuel prices, be returned to consumers in the form of very slightly lower petrol prices.
A tax on a tax is almost as bad as retrospective law.
The rest of the fuel tax should stand for reasonable budgetry and environmental reasons.
“there’s some credible evidence floating around that suggests the saudis can’t pump any more oil than they currently do.
It’s safe to assume two things about Saudi oil:
The Saudi government knows far, far more about their reserves than we do;
The Saudi ruling class know that their survival and the survival of everything they hold dear, depends absolutely on the flow of oil continuing.
Put them together and it’s very hard to escape the conclusion that the Saudi’s have well developed plans for the conservation of their oil. So when you say they ‘can’t’ pump any more, you have to wonder if that’s a physical limitation or a political one.
d
I get the feeling that Marn Ferguson is the Rex O’Connor in the Rudd Cabinet. Just as big Rex was single minded about ‘buying back the farm’ for the Whitlam true believers, Marn is, as others have suggested the coal resource industry’s last hope.
I appreciate the differences, but both have/had a long time to stew on the opposition benches and now with the chance to wield power both exhibit the same single mindedness to do it with or without their leader’s prior consent.
How does that explain the leak? Maybe someone in Marn’s office, a political appointee, figured he was helping the boss against a factional enemy (Rudd). Very naive and likely to be found out and purged by the boss. Rudd may believe all the Marn scapegoating and figure correctly that there is just no other portfolio for this Labor hard man. So Marn will survive to stew/fight another battle. Clean coal? You better believe it.
SKY NEWS would like to speak to a petrol or trucker blogger about the deisel protest today.
Please call me URGENTLY on 0207 585 4567 asap, if you are available to be interviewed tonight at 1930.
Thank you
An amusing set of vacuous posts!
Poor old Martin – captured by industry, low IQ, victim of too much time in Opposition, a conspiracy victim, etc. Yawn, yawn….
Whatever be his shortcomings (and there is no shortage)the only policy proposal of even minimal substance was that of Fergusons. And for that he should be supported not pilloried – at least by those who are interested, or pretend to be interested, in policy rather than ideology!
Footnote: Rex Connor too took a deep personal interest in the Australian coal industry. I recall around 1974, someone saying Rex wasn’t too keen on solar, wind, tidal power etc. A coal champion. A coal fancier. And then there was his plan for a national grid of natural gas pipelines… now where would we borrow the cash to build that? From some nut-chewing con-man? Yeah, why not?
Tirath!
“… the coal resource industry’s last hope.”
There is not the slightest chance that any Australian government in the foreseeable future will do anything that significantly damages our coal industry. Anybody who thinks otherwise is allowing their hopes to triumph over reality.
GJ ,
Ha! think a simple substitution of initials is enough to hide your identity ?
Still with Gandi gone and Fyodor and Katz locked in the Quibble of the Week let me extend a warm welcome to you to enjoy this thread.
It will be interesting to see when, if ever, the politics of petrol prices meets the politics of carbon emissions. Will the discourses ever collide?
“A tax on a tax is almost as bad as retrospective law.”
Why? What on earth is wrong with a dreaded ‘tax on a tax’? There is no logical basis for opposition to a tax on this basis.
Retrospective law, there are clear moral reasons that is bad.
I think Ken Lovell is right about the politics of coal in this country, at least until such time as, and if, “clean coal” is found wanting as a low-emissions technology.
Which will be as long as they can bluff their way through the ‘testing’ stages of CCS, invoking a naive view of the linear development of techno-science that has never really existed outside the dreams of modernist bureaucrats and entrepreneurs.
Politicians around the world are lining up to cut fuel taxes:
Sarkozy says EU should cap sales tax on fuel
Meanwhile Gordon Brown comes out with the hilarious comment that its a scandal that OPEC controls 40% of the world’s oil. Gordon, the oil is where it is, mother nature put it there, there’s nothing anyone can do about it. Perhaps the UK should have considered that before burning through two-thirds of North Sea oil and gas in less than 40 years!
The only one talking sense is good old George Monbiot…
There’s a meme current on the web and in parts of the MSM that the sharp increase in prices is because the Saudis and others are hoarding oil for the future for when prices are higher. Most commenters (especially Ay-rab hating RWDBs) assume that’s a Bad Thing, but hoarding a limited resource for a period when the price will be maximised is in the consumers as well as the producers’ interest.
They’re doing us a favour by saving the oil for when we need it most (as indicated by our willingness to pay those higher prices in the future). The alternative course is not cheap oil now with higher prices in the future, but cheap oil now with total unavailability in the future.
As Milton Friedman noted successful speculation (which is what this is, on a grand scale) is always stabilising.
Who’s to say it’ll be successful speculation? I wouldn’t mind so much if the Saudi’s were deliberately holding back (especially in the light of the Iraqi situation) but there’s no evidence to suggest it’s true, and lots of anecdotal/peripheral evidence to suggest they’ve overused their existing massive resources and have promised to continue at an unsustainable rate. Now, they probably should start planning for the future but I have no reason to believe they are that forward thinking. With some of their oil recovery methods they are literally in uncharted territory which is pushing a lot of their “conventional” oil straight into the “unconventional” pile. I don’t suggest paranoia, but I would suggest cautious pessimism (including considering moving out of a mega-city if you’re living in one).
On the other hand, if George Soros is right and it’s all just a speculative bubble, feel free to call me an idiot.
George Soros isn’t the only analyst recommending caution – those funds have to chase some outperforming index and it has been a one way bet with commodities for a couple of years now.
We all know it , we are all listening to everyone talking about it so time to sell and head for cover as another bubble bursts.
From the Kansas City Star – To meet the needs of these investors, Wall Street and Chicago’s commodities houses came up with all sorts of new vehicles, including the commodities equivalent of mortgage pools and asset-backed securities.
There are various estimates of how much of this new investment money flowed into these vehicles in the past two years. Philip Verleger, who closely studies commodity markets, estimates that the inflow was running at an average of $100 million a day during most of 2006 and 2007, rising to as much as $1 billion a day during the frenzied trading of February and March.
It’s hard to imagine that it wasn’t a significant factor in skyrocketing prices that have created problems for many of the nonfinancial players who rely on the commodity futures markets for selling products, assuring supplies and hedging against price fluctuations.
Perhaps the best proof of all that there’s a speculative bubble in commodities that may be about to burst: ConAgra, the 147 year-old food professor, recently sold its commodity trading division to a hedge fund for $2.1 billion. Cash.
Indeed, the only people who don’t believe speculation is driving a commodities bubble are the big commodity traders and the commodities exchanges, which are profiting handsomely from the soaring prices and trading volumes, and the regulators at the Commodities Futures Trading Commission, whose economists cannot seem to find statistical evidence that financial investors have had much of an impact on commodity prices.”"
Ah ConAgra – everyone’s idea of a lovely multinational.Suck you in then sell out . Classic .
Now Alan Greenspan is getting in on the act too-
Greenspan Sees Speculative Bubble In Oil, Grains Prices
ATHENS (Dow Jones)–Former Federal Reserve Chairman Alan Greenspan said Tuesday that the recent rapid rise in world oil and food prices was, in part, the result of a speculative bubble in international financial markets.
But in remarks to a conference here, Greenspan added that spikes in world commodity prices were also partly due to fundamental factors, like a reduction in crop land and a greater demand for protein rich foods in the developing world.
“Yes, there are aspects of a bubble in oil and grains, but nonetheless there are fundamental forces that are driving it,” Greenspan told conference participants via a video link.
He added that controlling the rapid increase in commodity prices is one of the most difficult challenges facing central banks worldwide, but he stressed that globally, “inflation isn’t out of control at this point.” “.
Big call on the level of inflation but an adjustment to the screamingly high commodity prices will hose down the inflationary hotspots.Let’s hope so anyway.
Its irrelvant whether the Saudi’s are keeping the oil in the ground for future generations, or they can’t pump any more because of geological limitations. The fact is supply is not meeting demand and the price of crude must rise as a result.
There’s undoubtedly some speculative froth in the oil market at the moment, but here’s a hilarious explanation as to why speculation isn’t the main driving force. Love the swan dive!
Unlike the tech bubble its the fundamentals of demand and supply that are driving this market.
Thanks carbonsink, gotta love that Rick Santelli.
But as he says the presettlement prices are distorted and will fall back to represent the market vale at expiration.
Rememeber it is only part of the price that will be driven by speculation and I am a fervent believer that ‘true value’ always establishes itself.
I agree w/ Ken on the coal comment. Change takes time. I hope we have it. Waiting for the American Goddo…& whistling.
And Robert is right that healthy debate in a Party is essential. But leakers to News Ltd etc. worry me. Hopefully there is method in this seemingly disloyal activity & madness…:)
Furthermore, Rudd & co. must be doing something right:
“SIX months after sweeping into office the big question has to be posed whether Kevin Rudd will be a one-term wonder.”
“He needs to slow down, take stock and stop running around at a million miles an hour.”
and on & on it goes. Clinton Porteous of the Courier Mail trying to shove an idea into the QLD reader’s head. And we have advice for Labor too.
Lately we have seen a full bore campaign by the haters of Rudd & co. to damage the ship…slow it down. It can get quite confusing in the fog of battle.
I was worried about Labor feeding the media Black Hole yesterday. And going too overboard w/ some comments re: moral panic. I’m still worried about political games on the MORALITY front…& the fallout.
BUT…
Today, I recommend on the economic front…& petrol-related stuff…full steam ahead.
On speculation – it is only speculation if the buyer takes delivery. Think about Qantas – it buys forward – and tales delivery. But is that speculation? Qantas will argue that it has read the tea leaves and it thinks prices are going up. Therefore it locks in prices today and can do its planning. If meanwhile the oil price halves, its competitors will benefit.
However Qantas can also look at a ten year chart. Why anybody thinks the price will go down is beyond me.
BTW Rudd & Nelson are pathetic. They are like a couple of school girls arguing over who has got the bigger 5c. The issue is much much bigger and Rudd should be leading.