PETROL PRICING IN AUSTRALIA AND THE OPPORTUNITY TO SUPPLY ETHANOL FROM SUGARCANE AND OTHER RAW MATERIALS

PETROL PRICING IN AUSTRALIA AND THE OPPORTUNITY TO SUPPLY ETHANOL FROM SUGARCANE AND OTHER RAW MATERIALS By MALCOLM WEGENER 1,2 and FABIO DE CAMPOS QUEIROZ 3 1 The University of Queensland, Brisbane, 2 CRC for Sugar Industry Innovation through Biotechnology, and 3 University of Sao Paulo, School of Agriculture (Escola Superior de Agricultura 'Luiz de Queiroz'), Piricicaba, Brazil Email: malcolm.wegener@uq.edu.au KEYWORDS: Petrol Prices, Crude Oil Prices, Refining Margins, Ethanol, Production Costs, Taxes and Subsidies. Abstract AUSTRALIA was dependent on fuel imports to meet about 13% of petrol demand, 17% of diesel fuel demand, and 3% of jet fuel demand in the 2003 2004 financial year. Since that time, both fuel prices and quantities of imported petroleum products have increased. The major elements that affect the prices paid for petrol and other transport fuels in Australia include the world price of crude oil, the Australian-US dollar exchange rate, refinery costs to convert crude oil into petrol, Australian taxes and state government subsidies, retail margins on petrol sales, and day-to-day service station competition. Historical trends in these factors are examined and the cost of producing ethanol from various raw materials compared with domestically produced and imported transport fuel products. At current crude oil prices and exchange rates, ethanol from molasses can compete with petrol on an ex-refinery, tax adjusted basis even when an allowance is made for the difference in performance between the two fuels but ethanol from syrup would be too expensive, except at very high crude oil prices, to be converted to ethanol. However, under the excise arrangements proposed for 2014 2015 when ethanol will be taxed at the proposed rate of 12.5c per litre, the break-even price for ethanol is much lower. Under those assumptions, ethanol from molasses or grain would not be competitive with petrol at a crude oil price of $US60 per barrel unless the cost of producing it was less than 73c per litre. Ethanol from syrup would only compete with petrol if the crude oil price was $US70 per barrel or higher and the sugar price was low, around $250 per tonnne. At higher sugar prices (e.g. $300 per tonne), the crude oil price needs to be nearly $US80 per barrel before ethanol produced from syrup would be competitive with petrol. Introduction In 2000 2001, Australia produced 42 753 million litres of liquid petroleum (crude oil, condensate, and liquefied petroleum gas) which was 95% of the demand for liquid petroleum products at that time (Australian Institute of Petroleum, 2005). Since then, the proportion of locally produced crude oil used to supply transport fuel has declined. Interest in producing ethanol has increased again in recent years as crude oil prices escalated, and ethanol is seen as a potentially cheaper alternative transport fuel to expensive 11

fossil fuels. Ethanol can also be used as an oxygenating additive to gasoline and has the capacity to reduce greenhouse gas emissions in the transport sector. World ethanol production was around 40 billion litres in 2004 (UNICA, 2005). Brazil is the largest ethanol producer in the world (15 billion litres), followed by USA (12 billion litres). China and India are other significant producers. To date, Brazil and the USA have been the major countries producing and consuming ethanol as fuel and together they represent approximately 85% of current demand. Ethanol production in Australia (currently about 135 million litres (ML) annually) is small by world standards, and we are placed about 19 th in the table of world producers. Of the ethanol produced in Australia, about 60 ML is currently used for transport fuel. About 65% of the ethanol produced in the world is currently used as fuel, 21% is used in industry (pharmaceuticals, cosmetics, etc), and 14% goes to beverages (UNICA, 2005). There was a rapid rise in crude oil prices in 2005 (Murphy, 2005) and ex-refinery petrol prices above $US50 per barrel are predicted for the next few years. This has focussed attention on ethanol as a potentially attractive alternative to conventional transport fuels. Its expansion in the energy marketplace is essentially a matter of economic competitiveness and supply, although ethanol does have environmental advantages. The desirability of producing biofuels (ethanol and biodiesel) for the Australian transport sector was recently evaluated by the Australian Government (Commonwealth of Australia, 2003; Short and Dickson, 2004) who concluded that to reach a target of 350 million litres of biofuels by 2010, Australia would need to produce another 205 ML of ethanol and 30 ML of biodiesel. The ethanol was assumed to be produced from molasses (60 ML) and grains (145 ML), while biodiesel would be produced economically from waste cooking oil. Components of petrol price To assist the sugar industry evaluate opportunities to invest in the new capital required to produce ethanol, the major factors that affect the prices paid for petrol and other transport fuels in Australia are examined and the production costs for ethanol that would be competitive with existing fuel supplies are determined. There are five major elements that affect the prices paid for petrol and other transport fuels in Australia:! the world price of crude oil;! the value of the Australian dollar relative to the US dollar (any decline in the value of Australian dollar increases domestic petrol prices);! refinery margins (based on a Singapore benchmark);! Australian taxes and state government subsidies; and! retail margins and day-to-day service station competition. These factors affecting the price of petrol in Australia are examined and used as the basis for determining the competitive position of ethanol with alternative fuel sources. A spreadsheet has been developed (Table 4) that enables ready calculation of break-even prices for conversion of sugar and sugar by-products to ethanol at a range of crude oil prices and exchange rates. Crude oil prices In recent months, the price of crude oil has been at historically high levels and crude oil prices were above US$55 per barrel on the world market for much of 2005. The price of crude oil fluctuates with no regular pattern, reflecting international demand and supply for crude oil. The price of crude oil peaked at $US71 per barrel on the New York Commodities Exchange in August 2005 immediately after hurricane Katrina devastated parts of the US Gulf of Mexico coast. 12

The pricing of crude oil on the world market has become increasingly transparent since the 1990s through the wider use of price markers such as West Texas Intermediate (WTI in the USA), Brent (in Europe and Africa), Dubai and Oman (Middle East), and Tapis and Dubai (in Asia). The main criteria for a product to be a marker is for it to be sold in sufficient volume to provide liquidity (many buyers and many sellers) in the physical market as well as having definable physical qualities. In Asia, there is no futures exchange where crude oil is traded and which would provide pricing information to the same extent as WTI and Brent do in other parts of the world. The pricing of Tapis crude oil, a marker for light sweet crudes in the Asian region, is based on an independent panel approach where producers, refiners, and traders are asked for information on actual transactions and, where there have been none, their best guess is provided. Reported comparisons of WTI and Tapis crude oil prices show that they have followed much the same pattern over time (Australian Institute of Petroleum, 2005). In 2003 2004, the price of West Texas Intermediate crude oil (WTI) averaged US$34 per barrel, 13% higher than in 2002 2003. For the first time, demand factors rather than oil supply, seem to be driving up the price of oil on the world market as countries like China and India increase their consumption of petroleum products. Singapore is the third largest refining and marketing centre for petroleum products in the world and is the closest major source of refined petroleum products to Australia. Australian petrol prices follow Singapore market prices because Australian oil companies imported about 13% of Australia s petrol in 2004 2005 and Singapore is a major source of petrol for importers. Petrol prices in Australia Singapore is the most likely source of imported petroleum products, and prices for petrol from Australian refineries are not necessarily based on the actual cost of converting imported crude oil into petrol. Instead, the ex-refinery price of petrol may be based on an 'import parity price' calculation, based on the Singapore market price for petrol, adjusted for Australian fuel standards and freight to Australia. This is basically what it would cost an importer to bring a shipload of petrol from Singapore to Australia, assuming no time delay. For example, the importer pays the Singapore petrol price including any premium to meet Australian quality standards, adds freight to bring petrol to Australia, insurance, and currency and commodity hedging charges (all in US dollars). The landed cost needs to be converted to Australian dollars at the prevailing exchange rate. Various other amounts are added by contractors along the supply chain for terminal storage, distribution, wholesaling and retailing margins, excise (less any state subsidy) and GST to determine the final retail price of petrol in Australia. For unleaded petrol, Australian prices are linked to the spot price of Singapore Mogas 95 Unleaded while Australian diesel prices are linked to a combination of spot prices for Singapore Gasoil (80%) and Singapore Kerosene (20%) (ACCC, 2002 cited by Short and Dickson, 2004). Prices for these refined products are closely correlated with crude oil prices. The regional average trade weighted price of crude oil can be inferred from Tapis crude oil (produced in Malaysia) which is the benchmark crude for Singapore refiners. Prices paid for Tapis crude and other petroleum products are only available from commercial information sources but the Australian Institute of Petroleum publishes a daily chart of these prices. The transport cost of bringing petroleum products from Singapore to Australia is approximately US1c per litre. 13

An alternative approach to pricing petroleum products in Australia is to start with an appropriate crude oil price (expressed in US dollars), add the cost of transport to Australia, and convert this into a landed price expressed in AUD using the appropriate exchange rate. Since most of the information in the oil industry is expressed in $US, it is practical to continue to work in US dollars and make the conversion to AUD at the stage of the product leaving the refinery. To find a comparable ex-refinery price for petrol in Australia, the refiner s margin needs to be added to the landed crude oil price. Refiners margins were recently reported to average $US9.80 per barrel in Australia (Morgan Stanley, 2005) but ranged from $US7.28 in the first half of 2005 to more than $11 per barrel in the four months to 31 October, according to information available from Caltex (2005a). As with other industrial variables, the refinery margin is established by the supply of and demand for refinery capacity around the world, and thus does vary within reasonably well defined limits (usually $US2 8 per barrel). However, it has been known to fall below zero on occasions and has reached as high as $US12 per barrel in the past. Recently, Australian refineries have been purchasing only about 40% of their crude oil requirements from Australian oil fields. Partly because Australia crude oil is generally light, and getting lighter, some heavier crude oil is imported to produce lubricating oils and bitumen. As demand for these products occurs, Australian refineries (which in general are apparently not designed to process large quantities of very light crude oil), must resort to heavier imports. Also in the past, imported crude oil could generally be purchased at lower prices than locally produced oil due to the Petroleum Resource Rent Tax which is levied at 40% of the cash profits of all offshore crude oil producers in Australia, with the exception of the North- West Shelf project, which pays a variety of royalty and excise duties (Howarth, 2004; Davis, 2005). Since Australian crude oil prices are not freely reported, the option of comparing the cost of producing petrol from domestic crude oil cannot be compared with imports. Exchange rate Like a number of other internationally traded commodities including sugar, crude oil is purchased in US dollars, meaning that changes in the value of the Australian dollar relative to the US dollar have a direct impact on the price of crude oil imported into Australia. Therefore, changes in the Australian dollar/us dollar exchange rate must be taken into account when looking at movements in crude oil prices. Long term changes in the $US/AUD exchange rate are well known in the sugar industry and they have just as much impact on the production of energy products and on competition from imports. In the past decade, $US/AUD exchange rates have fallen from 0.92c in 1984 to less than 50c in 2001 2002, but have recently recovered to around 75 77c. The actual exchange rate depends on a range of economic factors in Australia, the United States, and in other countries, so it is almost impossible to predict the path it will take in the future. For most of the past decade, the exchange rate has been in the 60 to 80c range so that a long-term rate of 70c seems reasonably conservative, and lower than the exchange rate applying at the present time. Australian government taxes and subsidies In late December 2003, excise rates to be applied to ethanol, biodiesel, and other fuels were announced by the Federal Government. Renewable fuels will generally receive a discount of 50% on the full rate of excise, based on energy content, making the excise rate for biodiesel and ethanol 19.1 and 12.5 cents per litre, respectively (Short and Dickson, 2004). 14

Excise for these fuels will be phased in over a five-year period, commencing in 2011. Excise taxes to be imposed on a range of transport fuels are presented and compared to the taxes on petrol in Table 1. Fuel type Petrol Biodiesel LPG, LNG, ethanol Table 1 Excise tax imposed by fuel type, 2003 20015 financial years (cents/litre). Financial years 2003 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 38.143 38.143 38.143 38.143 38.143 38.143 0 3.8 7.6 11.4 15.3 19.1 0 2.5 5.0 7.5 10.0 12.5 Source: Adapted from Short and Dickson (2004) Note: An increase of 0.6c per litre in fuel excise due to come into effect on 1 Jan 2006 was recently withdrawn by Federal cabinet decision (McHugh, 2005). Retail selling margins Retail petrol prices have always been a sensitive issue, and most state governments have sought to limit the number of retail outlets that the major petrol companies can operate. Most states have also imposed some form of control on petrol prices at the point of retail sale in the hope of ensuring price competition among service stations and to get a fair deal for petrol consumers. More recently, alliances between the major supermarket chains and the oil companies have allowed discounts on petrol prices to be offered, and this has injected an additional competitive element into petrol distribution and pricing. In spite of what many consumers believe, selling petrol at retail outlets is very competitive and large sites that achieve economies of size and supplement their incomes with sales of other products are responsible for the majority of sales. This has forced many smaller service stations to close. According to recent information released by Shell (Hepworth, 2004) and available from the Caltex company website (Caltex, 2005a), retail petrol sales margins have not increased over the past five years. Frequent fluctuations in petrol prices between 8 and 10c per litre are common as service station operators (usually in conjunction with major fuel suppliers) try to extract every available cent from petrol purchasers, even to the extent of raising prices regularly at weekends when family buyers are more likely to purchase fuel. Import parity prices for petrol in Australia Calculations to establish import parity pricing for imported petrol are shown next in Table 2. Comparable calculations for production of petrol from imported crude oil are shown in Table 3. Information is presented in both $US and AUD. With most of the components of retail petrol prices relatively fixed, the main variable that determines petrol prices at the bowser is the cost of crude oil. Table 4 shows the relationship between crude oil price and retail petrol price, over the range of prices that we have seen in the past year. These calculations have been made in an Excel spreadsheet that enables the two most important variables, crude oil price and exchange rate, to be varied. It is also possible to vary other elements in the price structure if required. 15

Table 2 Import parity pricing of imported petrol (Brisbane, December 2005). Cost in $US Cost in $AUD 1 Crude oil price, based on West Texas Intermediate crude (as a substitute for Tapis benchmark, Singapore Refinery margin, Singapore ($US7.00 per barrel) Freight, Singapore to Australia Landed petrol price Excise tax 2 Ex-refinery petrol price GST on ex-refinery sales Terminal delivery price 3 Retailer margin and freight GST on retail sales Typical retail price (early December 2005) 3 $US60 per barrel $US0.377 per litre $US0.044 per litre $US0.010 per litre $US0.43 per litre $81.63 per barrel $0.513 per litre $0.060 per litre $0.014 per litre $0.587 per litre $0.381 per litre $0.968 per litre $0.097 per litre $1.065 per litre $0.080 per litre $0.104 per litre $1.140 per litre 1 The exchange rate applying in early December 2005 has been used, i.e. $US0.735 =1AUD. 2 Normally, excise is charged at $0.3814 per litre but Queensland enjoys a state subsidy of $0.0836 per litre which, with GST, reduces the pump price of gasoline by $0.0920 per litre. 3 The terminal gate price quoted by Caltex for unleaded petrol from their Lytton, Brisbane refinery for 06 December 2005 was $1.0684 per litre (See Appendix Table A1). Table 3 Pricing for imported crude oil refined in Australia (Brisbane, December 2005). Benchmark crude oil price (West Texas Intermediate, or Tapis benchmark) Cost in $US Cost in $AUD 1 $60 per barrel $81.63 per barrel $US 0.377 per litre $0.513 per litre Freight to Australia Landed cost, Australian refinery Refining margin (based on Singapore benchmark $US7.00 per barrel) Excise 2 Ex-refinery value GST on refinery sales Terminal delivery price (incl GST) 3 Retail margin and freight State government subsidy on excise GST on retail sales Typical retail price (early December 2005) 3 $US 0.010 per litre $US 0.387 per litre $0.014 per litre $0.527 per litre $0.060 per litre $0.381 per litre $0.968 per litre $0.097 $1.065 per litre $0.080 per litre $0.092 per litre $0.095 per litre $1.140 per litre 1 The exchange rate applying in early December 2005 has been used, i.e. $US0.735 =1AUD. 2 Normally, excise is charged at $0.3814 per litre but Queensland enjoys a state subsidy of $0.0836 per litre which with GST reduces the pump price of gasoline by $0.0920 per litre. 3 The terminal gate price quoted by Caltex for unleaded petrol from their Lytton, Brisbane refinery for 06 December 2005 was $1.0684 per litre (See Appendix Table A1). Comparison of ethanol costs with petrol prices Various authors have estimated the cost of producing ethanol in Australia from a range of fermentable materials. The main components of the cost of production include fixed 16

capital and operating costs, and raw materials or feedstock, offset by any credits from the sale of by-products. The best example of a fermentation by-product is distillers dried grains which is sold as a livestock feed but the dunder from molasses fermentation also has value as a source of nutrients and soil conditioner. Production costs Expected costs of production for ethanol based on recent reports range from 46 cents per litre for ethanol from molasses to 57 cents per litre from feedgrains but could be as high as 87c per litre if made from sugar syrup and the cost of raw material is valued as the opportunity cost of diverting sugar from the crystal market. The components of this cost structure as set out in Table 5 have been adapted from the report by CIE (2005). Feedstock input Yield Price Cost Table 5 Costs to produce ethanol from grain, molasses, or syrup in Australia. Unit Grain Molasses L/t $/t c/l 380 204 53.7 280 60 21.4 17 Syrup (low sugar price) 450 250 55.5 Syrup (average sugar price) 450 300 66.6 Capital cost c/l 8.4 17.5 17.5 17.5 Operating cost c/l 7.5 9.2 9.2 9.2 By-product revenue Yield Price Value kg/l $/t c/l 0.9 135 12.2 2.1 2.1 2.1 Transport to terminal c/l 0.04 0.04 0.04 0.04 Total costs c/l 57.4 46.0 80.0 87.2 Ethanol was apparently available in the market in Australia in late 2005 for around 60c per litre, which corresponds approximately with the landed price of petrol from Singapore refineries. In August 2005, the Centre for International Economics (CIE, 2005) reported that ethanol prices in the United States and Brazil had declined and Chicago spot prices were around $AUD0.41 per litre. This was just prior to the spike in oil prices generated by hurricane Katrina and, in mid-december 2005, Chicago Board of Trade futures prices for ethanol were quoted around $US2.00 per gallon with a slight decline to $1.92 per gallon for February 2006 contracts before rising again to $1.99 in March and April. These prices correspond to approximately $AUD0.66 0.69 per litre. Vehicle performance Break-even costs for ethanol depend on the different taxation regimes for these two fuels and on the relative performance of vehicles running on them. Short and Dickson (2004) reported that the energy content of ethanol was 68% of that for petrol for an equivalent volume and therefore assumed that considerably more fuel would be used by vehicles operating on ethanol fuel blends. Research conducted for the Department of Environment and Heritage (Orbital Engine Company, 2004) has assessed the impact of petrol containing 20% ethanol by volume on the Australian passenger vehicle fleet. The program comprised both desktop and experimental studies and was sufficiently broad to capture the effects on vehicle performance and operation, durability, and component compatibility of ethanol blended fuels in terms of greenhouse gas emissions, vehicle performance (acceleration, driving quality, fuel economy, and tailpipe emissions) for new and old vehicles under both city and highway driving conditions. In general, there was an increase in fuel consumption for new vehicles when operated with E20 fuel. However, the increases measured were only in some cases as high as

the theoretical 6% predicted from the decrease in energy content of the fuel when 20% ethanol is added (Orbital Engine Company, 2003.) In general, there was an increase in fuel consumption ranging from 2.5% to 7%, depending on the operating cycle and vehicle tested, when operating on E20. The increase in fuel consumption averaged across all vehicles was approximately 5%. This was less than expected and is thought to be due to the subtle way that the various vehicle control systems adapt to driving conditions. The increase in fuel consumption in older vehicles with open-loop fuel systems was generally less than 2% while the increase for closed-loop fuel systems ranged from 3.5% to just over 6% depending on whether the vehicle was operating in city or highway conditions. An increase of 5% in fuel consumption is likely to be recognisable by the average driver. Break-even costs Under current excise arrangements, it appears that ethanol produced from molasses (46c/litre) and grain (57c/litre) would be competitive with petrol on an ex-refinery, excise adjusted basis. Table 4 Relationship between crude oil prices and retail petrol sales price. Oil Prices (US$/barrel) REFINERY 40 45 50 55 60 65 70 75 80 Cents/L Cents/L Cents/L Cents/L Cents/L Cents/L Cents/L Cents/L Cents/L 1 Crude oil price 0.327 0.368 0.408 0.449 0.490 0.531 0.572 0.613 0.654 2 3 Inward freight (USc/litre Refinery margin (US$9.70/ barrel) 0.014 0.014 0.014 0.014 0.014 0.014 0.014 0.014 0.014 0.079 0.079 0.079 0.079 0.079 0.079 0.079 0.079 0.079 4 Excise tax 0.381 0.381 0.381 0.381 0.381 0.381 0.381 0.381 0.381 5 GST 0.080 0.084 0.088 0.092 0.096 0.101 0.105 0.109 0.113 6 7 8 Ex-refinery cost RETAILERS Retailers buying price Retail margin, freight, etc GST on retail sales Retailers selling price Exchange rate ($US/$AUD 0.882 0.926 0.971 1.016 1.061 1.106 1.151 1.196 1.241 0.882 0.926 0.971 1.016 1.061 1.106 1.151 1.196 1.241 0.080 0.080 0.080 0.080 0.080 0.080 0.080 0.080 0.080 0.096 0.101 0.105 0.110 0.114 0.119 0.123 0.128 0.132 0.978 1.023 1.068 1.114 1.159 1.204 1.250 1.295 1.340 0.77 Note: Normally, excise is charged at $0.3814c per litre but Queensland enjoys a state subsidy of $0.0836c per litre which with GST reduces the retail price of gasoline by $0.0920c per litre. This conclusion would hold at oil prices down to $US45 per barrel for ethanol produced from grain and somewhat lower than that for ethanol from molasses. As the price of crude oil increases, the break-even cost of ethanol also increases, and with crude oil at $US60 per barrel, ethanol produced at a cost as high as 87c per litre could be competitive under current excise arrangements. Figure 1 shows a comparison of the current ex-refinery price for petrol against breakeven costs for ethanol at current and future excise rates over a range of crude oil prices. 18

Fig. 1 Comparison of ethanol cost with ex-refinery prices for petrol at a range of crude oil prices. If the excise arrangements proposed for 2014 2015 were in place and ethanol was taxed at the proposed rate of 12.5c per litre, then the break-even price for ethanol is much lower. For example, ethanol from molasses or grain would not be competitive with petrol at a crude oil price of $US60 per barrel unless the cost of producing it was less than 73c per litre. Under the higher taxing regime, ethanol from molasses would still be competitive but ethanol from syrup would only compete with petrol if the crude oil price was $US70 per barrel or higher and the sugar price was low, around $250 per tonnne. At higher sugar prices (e.g. $300 per tonne), the crude oil price needs to be nearly $US80 per barrel before ethanol produced from it would be competitive with gasoline. Discussion Recent increases in real oil prices have focused attention on the need to find alternatives to the world s decreasing supplies of crude oil. Increasing demand, from both developed and developing countries, has coincided with restricted supplies of oil from the main producing countries. The war in Iraq has reduced that country s ability to produce oil and other producers have failed to increase output in spite of strong price signals. While these short-term conditions, together with hurricane Katrina in the Gulf of Mexico, imposed severe price increases in 2005, the fundamental conditions appear likely to persist in the longer term because of rapid growth in demand from China and India in particular and a slowdown in the rate at which new oil reserves are being added to the world s total. The place for renewable fuels in the Australian transport sector was recently reviewed by an ABARE taskforce for the Australian Department of Industry, Tourism and Resources (Short and Dickson, 2004). They argued that limited quantities of biodiesel produced from used cooking oil and ethanol from new grain- and molasses-based fermentation capacity were the only options to produce biofuels that would be cost-competitive with petrol over the medium to longer term. The current assessment, based on more realistic estimates of crude oil prices, $US/AUD exchange rates, and likely prices for sugar and molasses indicates that ethanol from molasses can be competitive with petrol on an ex-refinery, excise-adjusted basis, but ethanol from syrup would be too expensive, except at very high oil prices. REFERENCES Australian Institute of Petroleum (2005). Crude Oil Pricing, available from Australian Institute of Petroleum website, accessed 6 December 2005. Caltex Australia Petroleum Pty Ltd. (2005a). Petrol pricing the plain facts, available from www.caltex.com.au/pricing, accessed 5 December 2005 19

Caltex Australia Petroleum Pty Ltd. (2005b). Terminal gate prices, available from www.caltex.com.au/pricing, accessed 5 December 2005. CIE (2005). Centre for International Economics.Impact of ethanol policies on feedgrain users in Australia, Centre for International Economics, Canberra and Sydney, August 2005, 57 p. Commonwealth of Australia. (2003). CSIRO, Bureau of Transport and Regional Economics, and ABARE report to the Australian Government, Department of Industry, Tourism and Resources: Appropriateness of a 350 ML biofuels target, Department of Industry, Resources and Tourism, Canberra, December 2003, 181 p. Davis, M. (2005). Oil price rise a budget bonus. Australian Financial Review, 4 November 2005, p 13. Hepworth, A. (2004). Oil giant slams price restraints, Australian Financial Review, 12 July 2004, p 7. Howarth, I. (2004). Higher oil prices provide tax windfall, Australian Financial Review, 22 December 2004, p 7. McHugh, A. (2005). Energy policy needs oil change, Australian Financial Review, 26 September 2005, p 25. Morgan Stanley (2005). Refining margins fuel Caltex share price, Australian Financial Review, 10 August 2005, p 18. Murphy, C. (2005). Falling oil price soothes inflation fears, Australian Financial Review, 2 November 2005, p 7. Orbital Engine Company (2003). A testing based assessment to determine impacts of a 20% ethanol gasoline fuel blend on the Australian passenger vehicle fleet, Report to Environment Australia, March 2003, 10pp, available at http://www.deh.gov/- atmosphere/fuelquality/publications, accessed 14 Dec 2005. Orbital Engine Company (2004). Testing gasoline containing 20% ethanol (E20) Phase 2B Final report: Market barriers to the uptake of biofuels study, Report to Department of Environment and Heritage, May 2004, 12 p, available at http://www.deh.gov/atmosphere/-fuelquality/publications, accessed 14 Dec 2005. Short, C. and Dickson, A. (2004). A. Revised assessment of biofuels industry viability. ABARE report for the Department of Industry, Tourism and Resources, April 2004, Australian Government, Bureau of Agricultural and Resource Economics, 21 p. UNICA, (União da Agroindústria Canavieira do Estado de São Paulo). (2005). Commodities da energia e Meio Ambiente, in Açúcar e Álcool do Brazil, (May 2005), http://www.portalunica.com.br/files/publicacoes/publicacoes1923.pdf (accessed 7 December 2005). Appendix Table A1 Caltex Queensland Terminal gate prices for petrol and diesel fuel, 6 December 2005, (cents per litre) Location Unleaded petrol Premium Unleaded Low sulfur diesel Lytton, Brisbane Cairns Gladstone Townsville Mackay 106.84 111.42 110.22 110.91 111.60 112.04 116.62 115.42 116.11 116.80 112.62 115.33 115.16 114.99 115.77 Source: www.caltex.com.au/pricing_ope_pri_asp (accessed 5 December 2005). 20