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What’s Driving the Push for Ethanol Fuel?

Despite years failing to gain traction at the bowser, the NSW government recently paved the way for changes that will renew its efforts to increase the availability and uptake of E10 petrol across the state. For those unfamiliar, in 2007 the NSW government set a mandate for 6% of all fuel sold across the state to be E10.

To date however, uptake has been limited to well below 3%, as motorists shun the product in favour of premium fuels. Through laws, which are expected to come into effect from September, businesses which were previously exempt from selling ethanol-blended fuel will now be required to sell the product. It has also been announced that in 2017, $4.5m will be spent on advertising to clarify the “myths” surrounding E10.

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While larger fuel businesses have long been stocking ethanol-blended fuel, small and mid-tier retailers are those who will be most affected. The Sydney Morning Herald was one of many to draw attention to the seeming inequality of the proposal, arguing smaller retailers “will be forced to spend an average of $140,000 a site to upgrade their storage tanks”, while the annual profits of such sites are only in the vicinity of $60,000.

With the product failing to make inroads within the market, why then is the government persisting and spending more to promote it? It’s hard to know the exact reasons, but reports have confirmed ethanol producer Manildra has made sizeable contributions to the Coalition party. At one stage, its representatives even met the NSW government 20 times in the space of just over a year.

Behind these dealings, the government claims the action will shore up employment within the biofuels industry. The problem however, is the lack of consideration for smaller businesses who may be required to close – up to 542 of them according to the Australian Convenience and Petroleum Marketers Association. And if that happens, you can bet the oil majors will be eyeing those sites, flush with the cashflow their smaller peers are ill afforded. The result? Job losses, less competition, and higher petrol prices for motorists.

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Smaller businesses have made it clear, as they did the last time the government tried to phase out unleaded petrol, they won’t take the changes lying down. It has already been claimed, in the absence of any redress from the government, smaller retailers will be forced to increase petrol prices up to 8c per litre. Allowing bigger companies room to increase their own prices, consumers appear set to lose out. With this in mind, one has to question the legitimacy and true rationale behind this latest push.

Given the last effort to change these laws in NSW failed dismally, as well as the shift in consumer preferences since then towards premium grades of fuel, it’s hard to conceive how such measures will help increase sales for a fuel demonstrating minimal evidence of environmental gains, as well as no certainty it is the most fuel efficient option or guaranteed to be the cheapest once you refuel. Government initiatives should be about finding win-win solutions – this however, has the hallmarks of a lose-lose solution, save for a select few.

3 comments

  1. Chabo says:

    Another stupid decision by Mike “the smiling assassin” Baird to provide maximum funding to his big-business donors at the expense of the rest of us.

    August 26th, 2016 at 2:20 pm

  2. Darren says:

    I find it rather amusing that manufacturers whose cars are deemed to accept E10 will only cover the warranty if the ethanol content is up to 10%. Surely this means in the long term it’s no good for your engine, just that it will take a bit longer to stuff up than if the ethanol content was higher. Then there is the fact that it’s 3 – 4% less fuel efficient than regular 91 RON unleaded, despite being only 1.5c per litre cheaper. Just a con to appease noisy green groups plus large political donors like Manildra…..

    August 26th, 2016 at 8:42 pm

  3. Paul says:

    What else would you expect from the Liberal SCABS looking after who will pay money to them evil BASTARDS.

    August 27th, 2016 at 9:17 am