Michael Pascoe writes:
With oil hitting another record high
overnight, above US$72 a barrel, a special prize should go to Peter Costello
for the most inane comment about prices.
Dollar Sweetie was widely quoted yesterday
as warning companies against trying to pass on higher fuel prices. AAP’s effort is one example: “So far so good, but we need
to be vigilant here that we don’t let it pass through into an inflationary
cycle as it did in the 1970s,” Mr Costello said. “I believe we can contain it
as long as businesses that use petrol don’t use that as an excuse to move
Someone should tell Pete how the economy
works. Businesses charge the most that the market can bear for their goods at
any time, rising petrol prices or not. The Treasurer’s warning is simply naff.
Oil prices have gone from US$11 eight years
ago to US$72 this morning without setting off an inflationary spiral because we
live in a viciously competitive business climate. The latest surge from US$60
to US$72 is merely a 20 per cent rise. The jump from $US20 to $60 is the bit
that should have hurt, 200 per cent, but most of that cost increase has been
absorbed in the supply chain without any admonishments from the Treasurer.
Pete’s problem is that he probably felt he
had to say something when he had nothing to say. Prices have gone up, the
Government isn’t doing anything about it and really can’t, so let’s say
something totally inane about warning businesses not to put up prices.
We can only await his wisdom on the common
cold, daylight saving and the Thargomindah marbles championship.