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Media Release

07/04/2005

Record oil prices highlight need to boost public transport

As oil prices hit another record high, the Public Transport Users Association (PTUA) has warned of greater pain for Melbourne households unless public transport is dramatically improved.

"A typical household is now spending around $16 a month extra on petrol compared to three months ago - and even then family budgets were beginning to strain under the weight of high oil prices and large mortgages," said PTUA President Daniel Bowen. "We now have a major investment bank warning that a barrel of oil may double in price from about US$55 to US$105 in the medium term. This could leave a typical household spending about $300 a month on petrol alone."

The price of oil has continued to break new records as major oil producers struggle to keep up with rampant demand in the USA and increasingly from China and India. "OPEC has effectively conceded that they are producing as much as they can and have lost control of oil prices," said Mr Bowen. "We are now faced with the very real possibility that global oil production is nearing its peak, cannot fulfil demand, and prices will continue to spiral upwards."

Australian households are among the most car-dependent in the world, sharing top-billing with the USA on the proportion of household income that is directed to transport and the amount of travel by car. "Poor public transport leaves many Melburnians with little option but to own and use cars for most or all of their transport needs," said Mr Bowen. "This level of car dependency leaves households - and the economy more broadly - very vulnerable to rising oil prices and physical shortages if supplies are disrupted in the volatile Middle East."

As recently as last week, the International Energy Agency (IEA) issued a series of recommendations on how to respond to disruptions in global oil supplies. "Record highs on the spot and futures markets for oil show the markets are jittery about the security of supplies," said Mr Bowen. "Now the IEA, the world's energy 'watchdog', is also showing signs of alarm."

"Public transport is much more energy efficient than private cars and has the potential to conserve scarce oil supplies whilst also easing the pressure on household budgets. Rather than spending taxpayer funds on road projects, government at all levels should prioritise the provision of frequent and reliable public transport services to help cushion Australian households from high oil prices”, concluded Mr Bowen.

Contacts:
PTUA Office 9650 7898


TRANSPORT FACTS:

Chart 1: Car travel & share of income consumed by transport

Petrol Prices comparison chart

Source: Newman, P., 2000, Sustainable Transportation and Global Cities, Institute for Sustainability and Technology Policy, Perth

Note: As car dependency rises, as shown by the amount of travel undertaken by car, so too does the proportion of income (or a city’s Gross Regional Product) that is consumed by transport. Despite higher fuel taxation, European households only need spend two thirds as much as Australian households on transport thanks to superior public transport.

Table 1: Comparison of cost of an additional car vs. public transport ($/week)

Additional car (average medium car):Public transport for one parent and 2 children:
Petrol price per litre90.1c$3.00$10.00
Standing costs$130$130$1301 x zones 123 adult weekly ticket$54
Operating costs$40$102$3082 x zones 123 concession weekly tickets$50
Total costs:$170$232$438Total fares:$104

Sources: RACV 2004; Metlink Melbourne 2005; PTUA calculations

Note: RACV car operating costs based on average for medium cars and 90.1c/L for petrol. As alluded to in the discussion above, there is strong potential for oil prices to maintain their upward trend of recent years. Some analysts predict prices of $3/L in the medium term and $10/L sometime after that.

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Last Modified: 6 April 2005