Family-owned businesses will suffer and fuel will become even more expensive in Queensland if desperate Labor premier Stephen Miles’ ludicrous idea to create state-owned petrol stations and intervene in the retail fuel market is allowed to happen

Virtually nothing demonstrates the Australian political left’s economic illiteracy better than this idea, although there have been some real doozies in the past. Ben Chifley’s attempt in 1947 to nationalise all banking in Australia comes to mind, as does the Greens’ ridiculous notion to put a national freeze on rents.

‘Intervention’ is a confronting term in any context, and a downright dirty word in economics. When governments intervene in free markets, they inevitably make things worse. The two sectors of the Australian economy with the most government market intervention are housing and energy, and these have never been more expensive in Australia than they are today, nor have they ever cost taxpayers as much money. It’s not a coincidence. The most efficient mechanism we have to determine the true cost of goods, labour and services is the free market. The government represents the opposite—they're always the most inefficient.

Miles claims he is intervening in Queensland’s retail fuel market because there is “market failure for an essential product,” but it’s a lie. The retail fuel market isn’t failing; it’s working like free markets should. Unleaded petrol prices at the bowser reflect the prevailing Singapore market price on a given day, fluctuations in local demand (the element that determines why you can sometimes get fuel cheaper at one station than at another across town), freight costs, fuel excise, and GST.

Petrol stations usually make only the slimmest of margins from fuel sales; the profits come primarily from the other items they sell (usually at a markup compared to prices for such items at supermarkets): snacks, drinks, basic grocery items, and tobacco products, just to name a few.

The impact of state-owned petrol stations will be to drive business away from existing station operators, who are already struggling with increased costs and wages, and from reduced revenue thanks to consumers tightening their belts in a cost-of-living crisis. It will inevitably make fuel more expensive in Queensland in the long run. Miles can't control it. His government can’t run a hospital properly and can’t run a power plant – why would anyone think they could run a petrol station?

During the pandemic, when the cost of fuel was starting to bite Australian motorists hard, One Nation pushed for a temporary halving of the 44c/litre Federal Government fuel excise. The Morrison Coalition government halved it for six months, and this was immediately reflected in lower prices at the bowser. It’s time we revisited how fuel is taxed with a view to providing some long-term structural relief that would remain effective over the long term in reducing fuel prices paid by Australian motorists.