WITH a high inflation rate at the moment, Australia does not welcome an increase in world oil prices. If oil prices remain high, economists here expect the inflation rate to rise by about 1 percent to between 7 and 9 percent. ``Higher energy prices will certainly exacerbate the inflation picture,'' says Rory O'Malley, an economist at Informetrics Australia, an economic research company. Energy makes up about 5 percent of Australia's consumer price index.
If oil prices stay high, Australians could expect to see air fares rise. Qantas, the national airline, predicts the Middle East crisis could possibly add $100 million to its fuel bill this year. Fares would have to rise to cover the added expense.
Some gasoline prices have already risen as dealers anticipate future increases. Sydney residents watched gas prices move up about 20 cents a gallon in the past 10 days. Last week, to prevent price gouging, Paul Keating, Australia's federal treasurer, froze gasoline prices for three weeks at the wholesale level and at stations owned by major oil companies.
Fortunately, the major impact of the Middle East conflict will be price, not availability. The country is nearly self-sufficient in petroleum. It only imports a small quantity of heavy crude oil used to make diesel. In fact, Australia is a net energy exporter, since it exports large amounts of coal to Japan and other industrialized parts of Asia. The hike in oil prices worldwide ``may make it easier for the coal companies to negotiate coal contracts,'' says Mr. O'Malley.
In New Zealand, the impact of rising oil prices will be mitigated somewhat by the country's 50 percent self-sufficient in petroleum products. ``The effect will be relatively minor,'' says John Lepper, an economist at Integrated Economic Services in Wellington, New Zealand. The immediate effect has been an increase of about eight cents a gallon in gasoline prices. Economists expect this will raise the consumer price index by a modest amount. New Zealand produces some petroleum, but it is mostly heavy crude that is exported to the Far East, where it is refined into diesel and other heavy fuels. Instead, New Zealand imports lighter crude from Saudi Arabia for gasoline.
Higher petroleum prices, however, will add to the nation's balance of payments problems. ``They are already in a bad state,'' says Mr. Lepper. And, a world recession would quickly ripple over the Kiwi economy, which is still recovering from a recession. ``We may be in for another bad one,'' said Lepper. The government may also find itself criticized for its decision to sell the Motuni synthetic oil plant. The plant was recently sold to the Fletcher-Challenge Company after a cost to the taxpayers of $2.1 billion.