Wednesday, February 25, 2009

LPG stimulus for the economy

Here's an idea that may help stimulate the economy. We all know that Australia is a big producer of natural gas. The cost at the pump is conservatively estimated at 40% the price of unleaded petrol. If the government were to use part of the $42bil stimulus package to help local car manufacturers develop affordable LPG-powered cars, and then sell them at a subsidized rate to the public, it will go a long, long way towards stimulating the economy:

1. A typical household spending $250 a month on petrol will be able to save $150 each month.
2. The local car industry will get a head start in developing LPG-powered cars for the export market.
3. Reducing the import of crude oil will save foreign exchange. At the same time, exporting gas-powered cars will create a bigger export market for Australia's natural gas reserve.

Finally, if the government were to control the price of LPG at the pumps, I am confident that the price can even be reduced further. I have been going to a certain petrol station to fill up on LPG costing 36.8c per litre. Today, all of a sudden, the price shot up to 49.9c per lit, more or less in line with every other bowser in town. This gas smells of a cartel rat.

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