When the government delayed the entry of transport fuels into the ETS, they argued that past and expected high petrol prices would reduce demand as effectively as including the full cost of carbon. It's an appealing argument. Unfortunately, it seems to have been empirically disproven, with the latest data from the Ministry of Economic Development showing that high oil prices are having very little effect on sales:
Figures from the Ministry of Economic Development shows the volume of petrol sold in January to March was down 1.7%.Lest anybody be tempted to clutch at straws, a glance at table D.7 in last year's Energy Data File show that that first-quarter downturn is seasonal. It's the annual figure that counts, and that's all bad.Sales were up by 2% for the 12 months ending in March.
The Ministry says petrol sales rose by about 3% per year until 2004, but have halved since then to an annual increase of about 1.5%.
So, instead of standing back and letting the market do its job for it, the government's policy is essentially to do nothing to curb rising fossil fuel greenhouse gas emissions. Just like they did for the 1990's. And we'll all be paying for it. Thanks, Labour.
(Hat tip: Frogblog).
