Queensland to conduct inquiry on fuel subsidy

The Australian state of Queensland is launching an inquiry as to whether oil companies are passing on the state governments 8.3 cents (US$6.97 cents) per liter fuel subsidy to consumers. The inquiry follows a six-month investigation by a Treasury taskforce, which found that up to 2 cents (US$1.68 cents) per liter was not being passed on to motorists. Premier Peter Beattie said the taskforce found “strong evidence” of substantial market power that could be consistent with wholesalers absorbing a share of the subsidy. “I want to stress this Government’s commitment to ensuring Queenslanders get the full benefit of this subsidy,” he said. Under the Fuel Subsidy Act, fuel retailers are paid the subsidy directly by the Office of State Revenue and are required to pass it on by lowering the price they charge retail customers by the amount of the subsidy. (August 21, 2007)