Labor has reversed its outright opposition to biofuels such as ethanol, with Kim Beazley now embracing it as the panacea to Australia's petrol price woes. The Opposition Leader adopted a scare campaign against biofuels in the 2001 federal election. But as the Howard Government considers ways to increase the take-up of ethanol, Mr Beazley is now calling for a long-term strategy to end Australia "being hooked on Middle East oil". Labor's alternative fuel strategy comes as government MPs are preparing to confront John Howard on Monday over the rising costs of petrol, particularly in regional communities.

Coalition MPs want the Government to consider measures to cut the price of fuel in the bush, a plan likely to be resisted by Peter Costello and Treasury. The Prime Minister has nominated high petrol costs - caused by the spike in the world oil price - as his biggest worry going into a tough election year. Industry Minister Ian Macfarlane is working on a plan to cut the price of ethanol at the bowser, in a move the Government hopes will lead to a small cut in the overall price of fuel, which is approaching $1.50 a litre in the capital cities.

Mr Beazley yesterday signalled Labor's support for an alternative fuels policy, reversing Labor's previous criticism of the ethanol industry. "The price of oil from the Middle East is going to stay high for a very long time, probably forever. And what we need is an alternative from being hooked on Middle East oil," Mr Beazley said. "Short-termism won't work any more." Australia's plentiful gas reserves should be used to develop a new alternative supply of fuel for cars and business, Mr Beazley argues. "When we have got gas coming out of our ears in this country, we've got the makings here of a massive gas-to-liquid conversion operation," he said. "It's not a technology that isn't proven; the technology is proven. A number of countries now do this - countries like uswhich have enormous reserves of gas."

Labor previously has castigated the Government for offering support to ethanol producer Dick Honan, whose Manildra company has a large share of the nation's production capacity. But Mr Beazley is now more supportive of supporting the ethanol "possibility" as part of a broader push on alternative fuels.

Mr Howard, meanwhile, rejected calls from the Nationals to beef up the Australian Competition and Consumer Commission's powers, despite the watchdog saying it is powerless to quash profiteering. "Let's not get into the foolish situation of thinking we can cut the price of petrol by some amendment to a law when the manifest reason for the high price of petrol is the high price of crude oil," Mr Howard said. "We can only have cheaper petrol in Australia if there is cheaper crude oil around the world ... and I'd be misleading the Australian public if they pretended otherwise."

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