Fed: Fuel shortage could halt petrol price cuts

AAP General News (Australia)
12-15-2000
Fed: Fuel shortage could halt petrol price cuts

By Stephen Spencer, Economics Correspondent

CANBERRA, Dec 15 AAP - A shortage of fuel is preventing motorists receiving the full
benefit of falling world oil prices.

Oil prices fell to a seven-month low overnight after news that Iraq had resumed supplies
and warmer winter weather in Europe and North America had cut demand and eased fears of
a worldwide shortage.

Local petrol prices had already fallen around four cents a litre in recent days, but
further falls have been held up by a shortage of supplies - particularly in New South
Wales and Victoria.

"There is a shortage of petrol in Sydney at the moment," Service Stations Association
executive director Kevin Hughes told AAP.

"Caltex is on limited production and so is Shell.

"So the price in a lot of places is higher than it should be because they are limiting supply."

A Caltex spokeswoman confirmed that supply had been restricted in Victoria and New
South Wales due to a break in the Bass Strait pipeline and a problem at the Kurnell refinery
in Sydney.

"The supply of fuel is a little tight," a Caltex spokeswoman said.

"However, we're not expecting any shortages of fuel in the market place and we expect
ample supplies by early next week."

Mr Hughes said once the supply problems were overcome, prices could be expected to
continue falling.

"It's good news for the Australian motorists just before Christmas," Mr Hughes said.

"And provided the supply is maintained we should see significant falls."

But he warned that prices were unlikely to fall too much further as world oil prices
were now already at the $US28 a barrel limit set by the oil producing OPEC countries.

Indonesia has called on OPEC to cut back supply to keep prices high, but today Treasurer
Peter Costello said that pressure had to be kept up on OPEC to increase supply.

"Petrol prices are still too high in Australia and the best avenue for relief is world
oil prices coming down," Mr Costello told reporters.

"If we get through the northern winter ... and if you see a slowing of the US economy,
which you are seeing at the moment, then they are the best conditions, along with increased
supply from OPEC, for the price of oil to fall.

"If you want to attack the increase in the world price of oil you've got to keep supply
up; it's a matter for OPEC."

AAP ss/hu/br

KEYWORD: PETROL NIGHTLEAD

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