Caltex says no carbon tax hit on diesel


Refiner Caltex has rejected speculation that the carbon tax will mean a price increase in diesel refined locally. <br /><br /> The Australian market is exposed internationally on price, which means any domestic increase will fall prey to fuel that is imported and therefore escapes the impact of the tax, a Caltex spokesman tells ATN.

By Rob McKay | February 13, 2012

Refiner Caltex has rejected speculation that the carbon tax will mean a price increase in diesel refined locally.

The Australian market is exposed internationally on price, which means any domestic increase will fall prey to fuel that is imported and therefore escapes the impact of the tax, a Caltex spokesman tells ATN.

It appears that the same mechanism that sees global price fluctuations reflected in local pump prices may also protect domestic consumers from a carbon tax-induced hike.

Caltex has used the international exposure to defend the transitional assistance of about 94.5 percent of the tax’s cost to its business.

Experts at Rare Consulting suggested recently
that domestic refiners will pass on the remaining 5.5 percent in higher fuel prices but Caltex rejects this.

"The cost of permits purchased by Australia refineries will have no impact on petroleum product prices," the firm says in its latest The Star publication.

"The reason for this is that Australian refineries compete mainly with import from Singapore and some other Asian refineries.

"Most of these other refineries will not have to bear a carbon cost for many years, so the price of imports to Australia will not change as a result of carbon pricing.

"As a result, Australian refiners will not be able to pass on the cost of permits for their emissions in the price of petroleum products."

The free allocation of permits for refiners by way of transitional assistance has been a target of Green criticism of the carbon tax in its present form but refiners argue that the tax would put them at a competitive disadvantage without it.

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