aftermath of the financial crisis, many questions remain. Key among these is whether taxpayer dollars should have been used to bail out banks and other private companies or should they have been left to their own devices and allowed to sink or swim? I’ll answer that question next week.
Posting Date: 28 January 2013
Democracy in danger
In a recent post I expressed concern that politics is degenerating into a farce, with short-term popular sentiment increasingly impacting long-term policy formulation. Hopefully, I left readers with a clear sense of the dangers of the don’t-offend-anyone politics which now characterises Australian political life.
What I did not focus on was the role of the media in whipping up emotive opposition to sensible social and economic reform. The media, according to Lindsay Tanner, a former minister for finance in the Labor Government, is turning political reporting into a “carnival sideshow” driven by entertainment imperatives.
In his recently released book, Sideshow: dumbing down democracy, Tanner tracks the relentless decline of political reporting in Australia and abroad. He describes in great detail how the media manipulates the discussion of substantive issues in ways that entertain rather than inform. “Policy initiatives are measured by their media impact, not by their effect”, laments Tanner.
Tanner, quite rightly, asserts that “genuine democracy requires an informed electorate” but bemoans the fact that the media controls access to the electorate. “The media publishes what people want to read or watch and the public demand for serious news is in decline”. Consequently, politicians have been pushed into a self-defeating game of feeding the news cycle with stunts.
Tanner notes that as political coverage gets sillier, politicians are forced to get sillier to get coverage. “As politicians need to be interesting to compete in a world governed by the rules of entertainment, they happily collaborate”. Yet he believes that Australians deserve much better than the carefully scripted play-acting that now dominates our nation’s politics.
Journalists are always looking for quirky and amusing items that divert or titillate the audience. Tanner cites the 2008 presidential primaries where Hillary Clinton attracted saturation coverage for allegedly revealing some cleavage on the campaign trail. “The amount of flesh on display would have barely troubled a middle-class maiden aunt in Victorian England. Yet it was enough for the media to make it the lead news story across the country”, writes Tanner.
Tanner contends that the hyperbole which characterises media reporting is blatantly designed to manipulate the public’s emotions. He cites a number of examples where the media created unnecessary panic including the Global Financial Crisis, the Year 2K computer bug and the swine flu epidemic. The media reporting of these events produced a public response out of proportion to the threat.
A popular tool used by the media to distort impressions of politics and current events is “selective coverage” says Tanner. “When petrol prices spike, the media go into overdrive. When they fall, coverage is much more low-key.” Equally, every time interest rates rise, we see stories featuring struggling families. Yet when rates fall, little is said about the plight of self-funded retirees.
I think that Sideshow: dumbing down democracy should be compulsory reading for all journalists and reporters. Some reviewers have rated Tanner’s book as “refreshingly frank”. Others have labelled it a “scathing critique” of contemporary political journalism. Personally, I’d go one step further and categorise Tanner’s description of the media as “alarmingly true”.
Finally, and in fairness, I must acknowledge the media’s claim that they simply produce what consumers want. As a society, we would rather read about the sordid private lives of celebrities than have a serious debate about the long-term benefits of public policy. Just as we get the politicians we deserve, we also get the media that we deserve. As citizens, we are complicit with falling standards.
Posting Date: 20 June 2011
What fuels petrol prices?
Some things in life are a mystery. Petrol prices fall into that category. Many find it difficult to explain why the price we pay at the bowser fluctuates daily. While most motorists know there is a price cycle, many question why petrol prices shoot-up just before long weekends and holidays.
To understand how the local pump price for petrol is calculated, we first need to look at global forces. Three international factors drive the wholesale price of petrol in Australia – the world price of crude oil, the petrol price in Singapore and the value of the Australian dollar. Let me explain each in turn.
The single greatest factor influencing Australia’s petroleum prices is the cost of crude oil which is measured in barrels. The international price of crude oil accounts for around 50 per cent of the domestic price we pay per litre at the service station. Since the cost of a barrel of crude oil has risen dramatically over recent years, so have retail prices.
But crude oil is not the product you buy at the pump – it’s simply an ingredient in the petrol production process. Just as a paper mill turns timber into paper, a refinery takes crude oil and earns a “refiner margin” for turning it into petrol. Ninety-eight per cent of Australia’s total fuel requirements are controlled by four refiners – Shell, Mobil, Caltex and BP.
The petrol they refine is an internationally traded commodity whose price is largely determined by movements in global markets. Petrol prices in most countries are established with reference to the relevant refined petrol benchmark price. Australian retail petrol prices closely follow the Singapore Mogas 95 Unleaded benchmark, which is the price of refined petrol in Singapore.
The international benchmark prices of crude oil and refined petroleum are typically traded in US dollars. Thus, the value of the exchange rate between the USD and the local currency influences the retail petrol price. The recent strength of the Australian dollar has protected consumers from the effects of higher international petrol prices.
The next factor to be added to our wholesale fuel price breakdown is government taxes. There are two components to petrol taxes – a fuel excise and GST. All petroleum fuels in Australia have an excise tax of 38.143 cents per litre which represents the second-largest component (25-30 per cent) of the price of petrol in Australia. GST is also applied to the total price, at 10 per cent.
When all of the above components are added together, the price is referred to as the Terminal Gate Price (TGP). The TGP is the wholesale price for petrol in each Australian capital city but does not include distribution costs and retail margins.
With regard to distribution, once fuel leaves capital city ports it is sent to rural and metropolitan areas. A large part of the increase between retail and wholesale prices is the transport cost of getting the fuel to the bowser which is why fuel prices are generally higher in rural and remote areas.
Finally, competition also accounts for variances in retail prices and this is what drives the daily fluctuations that you see at the bowser. Petrol retailers discount prices to gain additional sales volume. Competitors respond and prices spiral down until they reach unprofitable levels. The market then corrects itself by ceasing or reducing the discounts.
This “normal pricing” holds only for a short while until someone starts the discount price cycle again. The big retailers, Coles and Woolworths,
