From: theo on
On Jan 6, 9:44 am, Fran <fran.b...(a)> wrote:

> What do you suppose would happen to vehicle miles (and the composition
> of the vehicle fleet) in Australia if the price of petrol went up and
> stayed up by, say, 50 cents per litre?

It's already done that in the last few years. And nothing much
happened to the composition of the fleet, except that 'performance'
cars got bigger and more powerful engines using more fuel.

Regardless of the pain of opening your wallet at the Servo, fuel is
the cheapest component of owning a motor vehicle. A vehicle costing
$30K new being driven 12,000 kms per annum (the stated average for
private vehicles) at 10 l/100km paying $1.20 per litre will cost $1440
in fuel. It will cost $500 in Rego fees, $500-800 in Insurance, will
require one service at $250, depreciate by at least 25%, $7500, and
will cost at least $2400 in Finance costs (I have taken this to be 8%
of the $30K you no longer have in Fixed Term Deposit, actual borrowing
will cost more). I won't bother with tyres ($200) and other minor
incidentals, such as RAC membership.

Your total costs are $12,590. An additional $0.50 per litre will add a
whopping $600 to your costs. 4.8%. Whoopee!

From: Epsilon on
Noddy wrote:
> whether it was good or bad is highly debatable

Excludes you, then, eh?
From: Epsilon on
John_H wrote:
> Krudd the Dud wrote:
>> On Mon, 04 Jan 2010 18:09:30 +1100, " Dr. Sir John Howard, AC,
>> WSCMoF " <""noujwas\" is a stupid muzzie troll ."> wrote:
>>> Mr James said the price Australian companies paid for their petrol
>>> had recently risen by six cents a litre to $1.18 - a four-month
>>> high.
>>> That rise hadn't yet been passed through to motorists, but it very
>>> likely would
>>> be in the coming days.
>>> Mr James forecast a retail price rise of five or six cents a litre
>>> within two weeks.
>> YOU
> Petrol was considerably more expensive in the last days of the Howard
> Government (and immediately after its demise)... who should we thank
> for that?

All right. I admit it. I did it, deliberately. It was my fault.

What are you gunna do about it, fuckwit?
From: Fran on
On Jan 6, 9:00 pm, G-S <ge...(a)> wrote:
> Fran wrote:
> > What do you suppose would happen to vehicle miles (and the composition
> > of the vehicle fleet) in Australia if the price of petrol went up and
> > stayed up by, say, 50 cents per litre?
> Initially?
> Not much... most people are fairly locked into their existing vehicles.

That's true. Vehicle purchase carries with it a huge sunk cost, which
acts as a very significant constraint on marginal price sensitivity.
Overcoming that to force a rapid change in car ownership patterns
would require a massive price signal. It's also not clear, at the
margins, that the chaos in the rest of the economy that would follow
something like that would be justified by the advantages, significant
as they would be, relative to a slower but certain and continuous
upward movement in real fuel prices.

> I'd expect a decrease in use, an increase in car pooling, public
> transport, motor scooters, push bikes and walking.

So would I. Studies in demand elasticity show that for every 10%
movement in real fuel price, somewhere between 0.22 -->0.6>% of demand
is lost. If the real price margin is maintained, cuts in demand tend
to increase as people see the long term trend as predictive and start
switching to more fuel efficient vehicles as they write off the
residual value of their vehicles. In the case of operators of vehicle
fleets, where the turnover in vehicles is up to three times more rapid
than in the private vehicle market and the cost of fuel is a
significant cost factor, the effect tends to be more dramatic, all
else being equal.

> In the medium term I'd expect a moderate increase in the sales of small
> and medium cars and in sales of LPG and diesel vehicles.

That has already proven to be the case in Australia in recent years.
Sales of large passenger and SUVs have declined relative to sales of
small passenger vehicles and the more cost-efficient diesel vehicles.
The current Ford Econetic being offered on-road at 25k and which boast
better fuel economy than a Prius (Hwy cycle said to be as low as 3.2L
per 100k) will surely sell well.

> To create a large change you'd have to double or triple the price of petrol.

Not necessarily. To create a *rapid* change you'd need to do that
because in Australia, common vehicle private ownership cycles approach
ten years and very few change in under five. Assuming a commuter
travels 20k in a year and has a car consuming at 7L per 100k -- fairly
mid range -- a 50 cent per litre rise is still less than $14 per week
-- not enough to recover the sunk cost losses of changing to a new
vehicle and also for on-roads, new warranty service costs,
depreciation, higher insurance, interest on loan etc. To overcome that
hurdle you probably are going to have to lift marginal vehicle costs
by closer to $40 per week. If you did though there would still
probably be what analysts call a 'rebound effect'. If a whole bunch of
people essentially write off their sunk costs to buy new and more
efficient vehicles or decide to do without vehicles altogether and
move closer to work or to public transport or whatever, then the
private vehicle market is going to have a glut of less fuel-efficient
cars, which will obviously be a lot cheaper both at wholesale and then
at retail. That would push the total cost of ownership of fuel-
inefficient vehicles in the oprviate vehicle market down relative to
more fuel-efficient ones, since these would be cheaper to buy, easier
to get parts for, cheaper to insure and attract lower debt service
costs. People weigh this against the more costly fuel bills and see
where the true price point is.

A more gradual (but perceived as significant and inevitable) rise in
real prices of fuel would minimise this rebound effect and get people
used to the idea of using cars as a luxury rather than as a banality.
There would be a more orderly and more permanent transition. You'd
probably find that people would live clioser to work and urban sprawl
would be reduced. We'd get more urban consolidation and more efficient
and public transport as we approached population densities of about 80
people per Ha (rather than as at present in Sydney, about 30 people
per Ha)

At 6 cents per litre though (roughly 5%) the principal change would be
around changed vehicle usage patterns such as those you outline above.

From: Fran on
On Jan 6, 7:09 pm, D Walford <dwalf...(a)> wrote:
> Fran wrote:
> > On Jan 6, 9:46 am, "Milton" <millam...(a)> wrote:
> >> "John_H" <john4...(a)> wrote in message
> >>news:7qo5k59nkuhu06re9ojolvjkvdsu1suikd(a)
> >>> Sunny wrote:
> >>>> "Noddy" <m...(a)> wrote in message
> >>>>news:4b42a411$0$66493$c30e37c6(a)
> >>>>> "Fran" <fran.b...(a)> wrote in message
> >>>>>news:42baf50b-1c00-4a42-899d-7014e3609473(a)
> >>>>>> Let's hope so. I'd prefer it to be a lot more but I'll take six cents
> >>>>>> as a start.
> >>>>> Why?
> >>>> It's watermelon speak, for  "all walk or ride a horse."
> >>> --
> >>> John H
> >> I'd say more like "weird"?? What a stupid thing to say! Maybe she is
> >> actually a Sheik??
> > What do you suppose would happen to vehicle miles (and the composition
> > of the vehicle fleet) in Australia if the price of petrol went up and
> > stayed up by, say, 50 cents per litre?
> Not a lot, the demand for increased wages followed by an increase in the
> price of everything wouldn't be a good thing though.

You're assuming a level of elasticity that doesn't correspond to the
real world. Not all people can pass on price hikes.

Some people can work more overtime, or pass on increased prices, but
not all can.

One suspects most people will cut back across the board by redcuuing
their vehicle usage in the lowest priority settings, driving more
economically, car pooling and cutting back on other discretionary

It's worth noting though that some of this increase would flow back to
the state in revenue, and since they have to spend it on something,
this would tend to support growth.

If there are fewer vehicles on the road at any given time, then those
that are on the road are likely to become more fuel efficient too.

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