A PERSPECTIVE ON IMPACTS OF FUEL PRICE RISES ON TRANSPORT

The paper provides a perspective on a range of impacts of fuel price rises on Australian transport since the introduction of full import parity pricing (ipp) of indigenous crude oil in August 1978. It compares movements in fuel prices with changes in fuel consumption, freight and passenger transport costs (including operating costs, freight rates and passenger fares), transport activity and model choice, shippers' physical distribution costs, the private motor vehicle stock and household expenditure on transport. The paper concludes that, with the exception of the air passenger and freight sector, the impacts of the rapid fuel price increases on transport demand in the post- ipp period have been relatively small. However, there have been significant direct and indirect impacts on petrol and aviation fuel consumption, on long distance non-bulk road freight operating costs, on private vehicle operating expenditure by households, especially those in outer urban areas, and on the size, composition and fuel efficiency of the private motor vehicle stock. The demand for road freight services has remained strong despite increases in operating costs because of quality of service factors and economies by shippers in non-transport physical distribution costs. There is no evidence of significant modal shifts in non-bulk freight since ipp was introduced. The main impact of ipp has been on air transport, with fuel price rises being passed on through higher fares and freight rates which have reduced the growth of demand for passenger and freight services and contributed to some modal shifts on shorter- haul routes. Fuel price increases have also been A contributing factor in increased fares and freight rates in surface modes of public transport. However, other factors, such as action to reduce operating deficits, appear to have had an important influence (a).