Fuel consumption cut 28 per cent

Press, 31 October 1979, Page 1

Fuel consumption cut 28 per cent

The earless days scheme and the petrol price rise in May have reduced petrol consumption by far more that the Government’s target of 10 per cent, according to Professor R. Manning, professor of economics at the University of Canterbury. Professor Manning said that petrol deliveries had fallen more than 28 per cent in the first month of earless days in Christchurch and neighbouring local-body regions. The week-end ban on petrol sales enforced since March had had no effect on petrol savings, according to sales figures obtained from the Christchurch City Council, he said.

However, because of certain factors in August and September, savings may not remain so high in later weeks. Industrial disputes, such as the petrol-tanker drivers’ strike and the national strike on September 20. reduced petrol stocks in Christchurch. At the same time, the 4.5 per cent wage increase came into effect from September ■ 3. and this may encourage motorists to spend more on ' petrol. Petrol deliveries rose in Januarv (4.4 per cent), Febniarv (2.5 per cent). March (2.4 per cent), and April (8.1 per cent); but thev fell in May (9.1 per cent). June (4.8 per cent). July (3.5 per cent). August (9.1 per cent), and September (28.8 per cent). These figures would reflect consumption about two weeks before the deliveries, Professor Manning said.

“These figures provide no evidence of decreases in petrol consumption following the ban on weekend sales: deliveries rose in March and April when the ban was in force,” he said.

International studies agreed that a 1 per cent price rise for petrol caused a drop in demand of between 0.25 per cent and 0.5 per cent. The increase in May, therefore, would have caused petrol consumption to fall by between 6.2 per cent and 12.4 per cent. Professor Manning said that a price rise of 35 per cent would have re-

duced consumption by the target of 10 per cent, without any need for earless days.

“If the retail price of premium grade petrol had been set at 41.2 cents a litre in May, instead of 38.6 cents a litre, then earless days could have been avoided,” he said. However, earless days were in effect a price rise, since driving on a earless day opened the possibility of detection, prosecution and a fine of up to $4OO.

“The measure of this implicit price increase is the fall in demand earless days have brought about,” Professor Manning said.