Price hikes in fuel or cars

Australian consumers now look set for a new test of their commitment to the environment and concern about global warming on top of the pending hikes in household energy prices they already face. The latest environmental impost is the federal government's plan to implement Euro 5 auto emissions standards as early as 2012 and Euro 6 by 2016, possibly earlier.

Mazda Australia's managing director, Doug Dickson, says this year marks "a bit of a sea-change" for the local auto industry and consumers. It's evident in the sharp divisions the federal government's draft Regulation Impact Statement on the matter has opened up between multiple vested interests -- environmental groups, motoring organisations and representatives of the fuel and auto industries.

Predictably, the fuel industry is not pleased by the prospect. The Australian Institute of Petroleum, peak body for the local petrol lobby, has warned that consumers will bear the brunt of the capital expenditure necessary to bring its product into line with the new standards, complaining that it's already under competitive pressure from cheap imported product.

Bringing sulphur content down from our ULP's current Euro 4-compliant 150 parts per million and PULP's 50 ppm to the 10 ppm mooted by the new standards would cost refiners well over a billion dollars, which can only take its toll at the bowser, it says.

Nor do local vehicle and component manufacturers like the idea. The Federal Chamber of Automotive Industries has questioned the methodology of the Bureau of Infrastructure, Transport and Regional Economics (BITRE) cost-benefit analysis informing the RIS, saying it fails to factor in local car makers' future product planning and the effect such a tightening up would have on production costs.

But importers like Mazda are equally blunt in their message about the ill effects of failure to move with the times.  Doug Dickson suggests that forcing auto makers to continue producing emissions gear specifically to accommodate our lower quality fuel will see the consumer paying through the car rather than the petrol -- if the car makes it here.

"The major manufacturers won't make cars just for us, which means some cars just won't come here. Some of those cars may work on lower quality fuel. But what manufacturers would go to all that trouble when there's a risk they'll fail?

Dickson suggests that once the new standards are implemented, the government may elect to mitigate the hikes in fuel prices with "a fairly aggressive public education program -- focusing people on buying more fuel-efficient cars, as they do on safety."

The Australian Automobile Association, federal peak body for the state-based motoring organisations such as the NRMA, RACV and RACQ, is in favour of early implementation, even while acknowledging the inevitability of fuel price rises.

And since the low quality of fuel in Australia, with its high sulphur content, has certainly placed an obstacle in the way of prestige importers bringing in cars with sophisticated induction systems, for fear of those cars failing or providing sluggish performance to cope with the fuel -- you can bet there'll be some importers with fingers crossed for earlier implementation.

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