The things journalists say!
This morning I saw part of the Today Show on channel Nine.
It was talking about the Oil price going to US$70, after the storm in the Gulf of Mexico. They talked about some market chatter about the price going to US$100. (that’s a 42% increase).
One of the journos (...) talked about that resulting in a 40% increase in the price of petrol at the pumps! He was talking about AU$1.60! I paid AU$1.25, last time I filled up. But I’m paying Canberra prices, so there no way I can compare, as he would be talking Sydney prices. (Australia media is becoming so Sydney-centric).
This is all so overly simplistic! Anyone who portrays themselves as a financial journo should be ashamed of this logic!
Surely the pump price of fuels would include things like federal taxes, state/terr. taxes, cost of infrastructure, labour, marketing, transport, did I say taxes! Are we expecting all these to go up to 40%, over the same period.
To illustrate that there is not a one to one link between the oil price & the pump price, take the period between 1999 and now. I remember the 1999 prices, I travelled during that year!
In early 1999, the oil price got as low as US$10 and the pump price was about AU$0.72. That is a 600% increase in the US$ oil price, over 6 and a bit year! The pump price has not gone up by anywhere near that percentage!
To short cut an explanation due to time constraints one thing. To take logical leaps is another!
Tune in next week for another adventure of GNOLLS IN S-P-A-C-C-E!