Pricey petrol does a world of good

There was a time when supermarket dockets were but fiddly bits of paper that were carelessly crumpled and thrown away. But a strange thing is happening at checkouts across the country. People are receiving their dockets gratefully, folding them carefully, and saving them to claim a four-cents-a-litre discount on petrol. Soaring fuel prices have transformed the humble supermarket docket into hallowed relief from record oil prices.

The high price of oil is changing consumer behaviour and attitudes elsewhere.
You can see the signs throughout the economy, from queues at petrol stations on Tuesdays to increased crowding on trains and buses. It’s the price system at work: consumers have responded to high prices by changing demand patterns. The resulting petrol probity is what the Government and Opposition risk distorting with their simplistic and damaging proposals to cut the fuel excise.

A price is more than just a number: it is a powerful signal to both consumers and producers about the future. When a good is in short supply, its price rises. This signals to consumers that they should use less of it and signals to producers they should make more of it. There is also a signal sent to clever firms and individuals to innovate and come up with substitutes and efficiency gains.

Sydney Morning Herald