Michael Pascoe writes:

Petrol prices mustn’t be nearly high enough
yet – that’s about the only rational reading of the dipstick bi-partisan policy
to pay people to convert their cars to LPG. If you have to pay someone to do
something that will save them money, obviously just the “saving” part of the
equation can’t be much.

But there is another rational explanation –
grubby politicians will do anything with your money to get them re-elected. The
‘s Ross Gittins penned a delightful piece on that very problem last week. While he was mainly on about traffic
congestion, he could have been forecasting Howard’s reported petrol panacea

thing I hate about politicians is the way they pretend to indulge us rather
than level with us. They rarely tell us the unvarnished truth about what
problems they can fix and what they can’t, preferring to string us along. They
act as though they can fix everything, which encourages a culture of complaint
and a focus on the alleviation of symptoms rather than a search for fundamental

Take all the whingeing about the
price of petrol. No pollie’s prepared to tell us that since the problem is a
global shortage of oil, the rise in price is a healthy development because, by
encouraging both producers and consumers to adjust their behaviour accordingly,
it offers the best solution to the problem.

So taxpayers will cough up for Howard’s
latest “stringing along” while the Opposition offers a double act of small
business spokesman Joel Fitzgibbon claiming the PM stole the idea from Labor and resources spokesman Martin Ferguson kicking both the nationalist
and xenophobic cans saying Howard is too concerned about selling LPG to the
Yellow Peril

instead of keeping it for Australian use. (OK, Martin didn’t say “Yellow Peril”,
but there could be a hint of that meaning in the subtext.)

And then there’s the fluffing about over
ethanol, an issue that isn’t as straightforward as various vested interests
would have you believe. Unlike the Brazilians, we don’t grow sugar cane to
produce the stuff – it’s not economic. The present feedstock in the sugar belt
is molasses, a sugar by-product that’s also in demand as a stock feed. Further south, it’s a question of growing
grain to turn into fuel – a sort of food-for-oil thing, and you know how messy
that can get.

Biofuels do have a role and will
increasingly happen as the technology improves and oil prices worsen, but it’s
simplistic for any politician to try to wave a policy wand and think it will
all just happen. Evidence of its future is Babcock and Brown increasing its
ethanol play
while evidence of at least some investors seeing the woody weed among the trees
was the failure of the Global Ethanol float.

An untested anecdote I’d like checked is
that the cost of LPG conversions has risen with petrol prices – the market arbitrages everything.