Wednesday, March 26, 2008

"You'd think it were in the public interest for this information to be provided to taxpayers as they would be picking up the bill...Apparently not."

Toll roads quiet on whether oil will take its toll on traffic

March 26, 2008

Michael West
The Age (Australia)
Copyright 2008

Private road operators could be living in a fuel's paradise, but they are unlikely to admit that.

Apparently the oil price is no big deal for toll roads.

A ring around some of the key operators Transurban, Connect East, Connector Motorways and even the peak body, Infrastructure Partnerships Australia, delivered not one oil price assumption. Even an industry range was out of the question.

Top secret stuff it was.

When a barrel of oil was changing hands for around $US50 a barrel back in 2005, Goldman Sachs came out with a report which predicted oil would get to $US100. The report was mocked as if it came from some kind of crackpot peak oil theorist.

Now traders are explaining in daily market reports how weak demand has been the reason the oil price slipped under $US100 and peak oil theory is mainstream, though preferably ignored.

And now Goldman, no doubt emboldened by its heroic call on oil from the days when $US50 seemed outrageous, has sallied forth with a ''super-spike high-end'' price of $US200 a barrel by 2010 should there be supply disruptions. That doesn't mean it's right but it is a fair call that oil is on an inexorable trajectory ... higher.

For the toll-road operators, though, the oil price assumptions are "externalities'' which are not public information but are contained in the ''independent expert'' traffic opinions from consultants used in their models.

You would think it were in the public interest for this information to be provided to taxpayers as they would be picking up the bill were the oil price to run too high and dramatically affect road patronage.

Apparently not.

There used to be a Public Sector Comparator document for privatisations so the public could get a peek at what it would cost to governments to fund works by issuing bonds against the cost and benefit of selling a concession to a private consortium.

There could even have been public transport options - options which will have looked pretty clever if oil went to $US200 a barrel in the next few years.

Rather, the media can't even get this detail via Freedom of Information requests even after spending thousands of dollars.

The concessionaires perhaps can't be expected to provide ''commercial in confidence'' information, even if it is over a 40-year lease of a public asset. Still, the reluctance suggests paranoia: ''In response to fuel increases, people would be expected to seek out more fuel efficient cars and routes rather than change their mode of transport,'' said one operator.

The argument on oil prices is that demand for motoring is ''relatively inelastic''. Further the concessions have tolls linked to CPI and oil is part of the CPI so they are covered as far as lifting their prices. They have a natural hedge - unless it simply becomes too expensive to drive.

Fuel efficient cars will go some way to addressing this fear but mass market electric and solar autos are some years from development.

© 2008, The Age:

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