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Oil companies must explain E10 price gap


Author: Daniel StantonDate: 04 April 2012

The NRMA has written to the Independent Pricing and Regulatory Tribunal's (IPART) enquiry into ethanol supply in NSW calling for an investigation into the rising gap between E10 and premium unleaded fuel, Octane 95.

The NRMA's IPART submission included new research which found that the gap between E10 and Octane 95 had increased from 9.5 cents per litre in September 2009 to 11.5 cents this month.

By contrast the gap between the international wholesale benchmark prices for regular and premium unleaded fuel - Mogas 95 and 97 respectively - is only two cents per litre.

It is expected that motorists who choose not to use E10 or have to use higher grade octane fuel would make the switch to Octane 95 after the phasing out of regular unleaded.

The NRMA is also calling on oil companies to display all grades of fuels on their price boards so that motorists are given information about all fuel prices before they pull into the service station.

NRMA Motoring & Services President Wendy Machin said the oil companies must explain the reason for the increased price gap.

"In the midst of the recent debate around ethanol in NSW we believe there was inaccurate information said publicly about the supply and pricing of ethanol - we welcome this IPART enquiry and hope it provides clarity around the issue," Ms Machin said.

"In the height of the debate on the NSW Government's E10 Mandate the oil companies went to great lengths to argue that mandating ethanol would force up the price of fuel.

"Our research has shown that there are considerable discrepancies in the price of gap between E10 and Octane 95 but it has nothing to do with mandating ethanol.

"The gap between the two grades of fuel has consistently widened over the last two-and-a-half years but this is not reflected in the benchmark prices."

The NRMA submission highlighted that around 70 per cent of service stations across NSW already sold E10 fuel and many had begun phasing out regular unleaded petrol in accordance with the E10 mandate.

It was alleged during the debate around the benefits of E10 that there were shortages of ethanol in NSW which would force up the supply of fuel - a point disputed by ethanol producers - and that there were serious performance issues with ethanol blended fuel used in modern vehicles.

Last month the NRMA conducted laboratory tests to measure the performance levels of E10 in comparison to regular unleaded fuel. The testing showed that the performance levels in fuel consumption between the two fuels were minimal.

The NRMA testing showed that a motorist driving a Hyundai i45 would get 738 kilometres on a full tank of E10 - this is only three kilometres less than the same vehicle running on regular unleaded.

Similar testing on a Ford Falcon found that a full tank of E10 travelled four kilometres further than regular unleaded.

The NRMA supported the E10 Mandate when it had bi-partisan support in the Parliament and continues to support policies and initiatives that encourage the take up of alternative fuels.

"The NRMA has led the charge for the development of an alternative fuels strategy in Australia as a means to reduce our dependence on imported oil," Ms Machin said.

Read the IPART submission. (PDF 510KB/5 pages)

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