Gas – good for enviro AND wallet ?

A $1000 Government subsidy for motorists making the LPG change

The proposed $1,000 subsidy is expected to apply to all new dedicated or dual fuel LPG vehicles and will cost the Government less than $1 billion a year BUT will the subsidy offset, over a 12 month period, the 12.5% excise due to be levied in 2011?

LPG Australia’s Ray North says the Federal Government was already planning to offer a subsidy to convert new cars to LPG in 2011, when gas will lose its exemption from government taxes. He says:

• even after a 12.5c a litre excise is in place, it will still be about 26c a litre less than the petrol excise of 38.14c.
• you use about 30 per cent more LPG to travel the same distance on petrol… in Sydney, at the moment, LPG might be 50 cents a litre, so the cost of traveling the same distance, litre for litre, petrol to LPG, would be 65 cents for LPG compared to around $1.40 for petrol.
• The average motorist would save about $30 a week and business and trade motorists who do higher mileage, would save much more.

BUT

The NRMA’s Alan Evans says it’s worthwhile making the change for vehicles like taxis, who do very high mileage, but for the average motorist who does 15,000 kilometres a year, it’s probably not an investment, unless they’re really keen to protect the environment, because it is better for the environment.

Retro-fitting a standard car running on petrol to support Liquified Petroleum Gas costs between $2,500 and $4,000 and the number of cars converting to LPG has doubled in the first six months of the year compared with the same period last year. 5000 owners a month have made the switch.

Caltex Australia chief executive Des King said petrol consumption in the first five months of the year was down 2.5 per cent. He does not believe alternative fuels such as ethanol, biodiesel and gas will supplant crude-based fuels in the foreseeable future, though they would become an increasingly important part of the fuel mix.

Jago Dodson, research fellow at Griffith University’s Urban Research Program, says a subsidy program should be means-tested to avoid the wealthy benefiting more than the less well-off.

“You’ve got to ask the question: is this a subsidy we need to be giving to wealthy residents in areas with good public transport, given that people on modest incomes in outer suburbs will be most affected by rising fuel costs because they’re more car dependent?”

He also said the huge volume of cars in Australia meant it would only be a solution for some vehicles and could cost billions of dollars and he questioned whether such a large-scale conversion could cause an LPG demand spike that would push up the fuel’s cost.

What will YOU do?