Today oil broke US$111 a barrel. Two weeks ago the record price was $101. Just six months ago the price broke $80 for the first time. Oil prices are rising at an accelerating pace. That flows into New Zealand fuel prices, predicted to top $2 a litre this year.
Calls to reduce petrol tax would increase demand when supply is already tight, leave a billion dollar hole in the roading budget (if that is covered from general taxation that is just a transfer of wealth from those who drive little to those who drive a lot), and, as with all tax cuts, provide only temporary relief leaving the underlying problem unaddressed (cf. the wage gap with Australia). Queensland has been subsidising petrol for the last few years: it hasn’t stopped prices rising and has put the burden on to taxpayers rather than heavy users of petrol.
The Government needs to invest heavily in alternatives to oil-intensive transport. It needs to buy back the rail stock from Toll and invest in much better rail infrastructure to get freight and passengers off the roads and into more fuel efficient trains. It also needs to realise that spending a billion dollars a year on motorways when petrol is getting unaffordable is not a sensible policy. Money should be diverted from these uber-expensive motorway plans into building comprehensive and affordable public transport networks in our major cities. Over the last five years rail passenger numbers in Auckland have tripled. Demand is there, capacity isn’t. Good progress is being made, but the motorway budget still dwarfs the public transport budget. That needs to change.
Labour has shown it is open to public transport but has been too timid as the crisis builds. National, well who knows what National’s transport policy is? But given its head in the ground attitude to sustainability there is little hope they will be willing to take the leadership needed to help New Zealanders avoid the crushing cost of petrol price increases. Only the Greens seem to have the vision to give New Zealanders less oil-intense options. Their challenge is to articulate an inspiring programme for the election, containing enough new spending to really confront the problem.