High petrol prices blamed on world situation

abc.net.au Fri, Feb 21 2003 5:03 PM AEDT

A senior executive of a major Australian oil firm says a number of factors are to blame for rising petrol prices.

BP Australasia president Greg Bourne says the main factor is a low oil inventory worldwide, but the cold weather in parts of the United States and a recent strike in Venezuela have also played a part.

He says the possible war with Iraq has also driven up the price of oil.

Mr Bourne's rejected claims the increases are being driven by opportunism.

"When you look at the competitive dynamic that's in the oil industry it is still highly competitive," Mr Bourne said.

"You still see the cycles, we all hate them but of course, people can take the opportunity to buy when they're at the the low and so you do see them coming right down to a low, and that cyclicity [sic] will continue, I'm absolutely sure of that."

Mr Bourne says while it may seem that the oil companies are making lots of money, they are not making huge profits.

"When you look at the return we get for the outlay, then you actually see that the profitability is not that great and indeed, if you look at all of the information that's been coming out from the Federal Government or any of the studies, it all says this is a highly efficient industry, it's not very profitable," Mr Bourne said.

"There's probably going to be some rationalisation in it - you know, it is tough."