LPG looms as latest fuel rip-off

WHY convert to LPG when it costs more money?

That is the question Evans Head retirees Garney and Maree Hickey will ask themselves when they venture north on their annual caravan trip next week.

Two years ago, when they travelled right around Australia, they did so on Liquid Petroleum Gas (LPG) and it saved them more than $2000 - the price Mr Hickey paid to install an LPG system in his petrol-powered Toyota Prado.

Today, with the price difference between greenhouse-friendly LPG and petrol much less, Mr Hickey figures he would have to drive more than 100,000km to pay off his LPG installation.

You can't compare the two fuels on price alone.

That's because LPG has less energy to burn, so you travel further for your dollar with petrol.

"I get 5km per litre on gas and 7.5km per litre on petrol," Mr Hickey said.

"When the price of gas is two-thirds that of petrol, it is not worth my while to switch to cleaner gas."

"It is just wrong," said Mr Hickey, who has written to complain about the situation to Federal Member for Page Janelle Saffin.

Australia is swimming in LPG, so the question is: why is our local, natural gas not being encouraged over imported oil products?

In fact, the localities where gas comes from Tasmania, the Northern Territory and Western Australia - attract the highest LPG prices at the bowsers.

"There is a complete disconnect when it comes to where the gas comes from and how much the motorist pays," Australian Automobile Association (AAA) research manager Greg Smith said.

He said the price you pay has nothing to do with the cost of manufacturing, and everything to do with free market trading, where speculators on the futures market drive up the price of oil in the wake of extreme demand from Asia.

"It is purely a supply and demand thing," Mr Smith said.

Because LPG is traded on the energy market, it reflects the rising price of oil.

In Australia there is an extra margin added for retail and wholesale, and that margin is smaller for petrol (3 cents per litre) than diesel (10 cents per litre) thanks to greater competition for petrol.

There is also a retail margin for LPG and it varies widely across Australia, with the best prices in Melbourne and the worst in Darwin.

Locally, LPG prices are dearer than Queensland, or even Grafton.

One thing in favour of LPG is that it, unlike petrol and diesel, does not attract the 38 cents per litre Federal Government excise. If it did, no one would buy it.

But there are now some motorists who want all three fuels treated equally.

With the recent increases in petrol, the Federal Government has set up a price watchdog, but the AAA wants the Government to go further by monitoring pricing for LPG, as well as for diesel.

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