There was a marked increase in the intensity of petrol price media across Australia, in advance of the Albanese Government’s decision to restore the market to full fuel excise from 12.01am on 29 September 2022. The media was full of politicians – from the Prime Minister to the Federal Treasurer – and motoring bodies ‘warning’ fuel companies not to exploit the 25.3cpl (including GST) increase in excise.
Some could be forgiven for believing that the actions of the Albanese Government were motivated by a desire to deflect attention from the fact that the increase was due to its’ decision to increase fuel tax – by making the fuel industry look like the ‘bad guys’. It should be remembered, however, that the same warnings were issued by the former Morrison Government when the excise was decreased earlier in the year.
Nonetheless, the commentary saw ACAPMA drawn out repeatedly by the media this week to explain how the community could be sure that fuel retailers would not exploit the tax change. All sorts of weird and wonderful questions were posed during this time.
“One such case involved a discussion with a newspaper journalist in Canberra alleging that Canberra service stations had decommissioned their forecourt fuel pumps in advance of the cut so that they could sell their fuel at a higher cost after the excise was increased”, said ACAPMA CEO Mark McKenzie.
“After confirming the allegation appeared to relate to just one site, we politely told them that it was likely more to do with pump maintenance issues but that, in any event, that sort of behaviour would be akin to ‘cutting off your nose despite your face’ and would only benefit the Federal Government”, added Mark.
The high intensity of media requests continued early in the morning after the excise had changed, but the nation’s media soon ran out of puff as they realised that the vast majority of fuel prices across the national retail network had not moved. In fact, data from Informed Sources Pty Ltd showed that the average regular unleaded fuel price in Melbourne actually fell slightly on 29 September 2022 – while the average in all other capital prices appeared unchanged.
There was one case, however, where one of the national TV News networks advised that they were heading out to a site in Box Hill (Melbourne) to film a service station site that was charging over $2.50 per litre – and that they wanted to interview the ACAPMA CEO afterwards to explain why that price was so high.
“In the end, the fuel price reported on Petrol Spy was incorrect and the discussion quickly turned to how our sites had managed the last-minute rush for fuel experienced at some servos”, said Mark.
As the working week ends, just 36 hours after the excise cut, average fuel prices across the nation have hardly changed – and the level of media inquiry of ACAPMA had fizzled out to nothing. That is not to say that the community – and the ACCC – will not continue to watch fuel prices closely over coming days, but the dire predictions of the sky ‘falling in’ did not occur.
Negative media commentary levelled at the fuel industry are not new. Those who work in our industry know they must expect ‘cheap shots’ from politicians and motoring bodies as they seek to gain publicity. Having a ‘crack at servos’ is a national pastime and it always gets a headline.
But there comes a point where the criticism goes ‘beyond the pale’. That is, beyond the point of acceptable behaviour. The NRMA commentary this week is one such instance.
In national media this week, most notably in the Australian Financial Review and some TV news broadcasts, the NRMA’s paid media contractor went on the attack claiming that the average wholesale and retail difference in the major capital cities was much higher than it should be. He went on to say that NRMA estimated that the top cycle price should have been $1.80 in the view of NRMA’s analysts.
Lobbed in the midst of a frenzied debate when motorists were already anxious about what would happen after the excise cut, this claim was not only manifestly wrong – it was openly reckless. It risked subjecting the nations’ 52,000 strong national service station workforce to increase acts of customer aggression – an issue that our industry has been grappling with for the past 8 months in the face of steep fuel prices and cost of living concerns.
But let’s take each of these issues in turn. First, NRMA’s commentary was openly wrong. It implied that the margins are high and would stay high as servos sought to profit from the fuel excise reset. As the NRMA would well know (or perhaps they really don’t despite their supposed fuel price expertise), the difference between wholesale and retail prices is always high at the top of the cycle – and then declines to zero or slightly negative at the end of the cycle.
Best demonstrated by comparing average Sydney prices (a city with a price cycle) with average Canberra prices (a city with no price cycle), the Sydney average unleaded price of $1.54 per litre was 25cpl lower than the $1.79 price in Canberra at the bottom of the last cycle. A fortnight later when we hit the top of the cycle, and Mr Khoury hit the airwaves, the Sydney average unleaded petrol price had peaked at $1.90 – 13cpl higher than the undiscounted average of $1.77 in Canberra. So, on balance, Sydney with its discount price cycle at the supposedly ‘abnormally high cycle price’ was doing better than Canberra.
While there was a bigger gap to terminal gate prices in both cities, no-one can yet make any reasonable observations about the reasonableness of this position until the new cycle is completed. In any event, that is the role of the ACCC – not the NRMA.
The NRMA’s tactic of citing the instantaneous difference between wholesale and retail prices at the top of the cycle is a well-worn tactic used by the nation’s motoring bodies to gain a sensationalist headline. It is used to imply to the (mostly uninformed) Australian public that the margin will stay at that level going forward.
But as we all know – it doesn’t. It falls to nothing (and often less than nothing) and therefore such a comparison is meaningless until you have at least looked at the average across the entire cycle.
In normal circumstances, ACAPMA would not have wasted its breath addressing such inane and misleading commentary but this commentary came at a time when the community was anxious about fuel prices and the risk of increased levels of customer aggression was high.
“Instead, we spent much of yesterday in radio and TV interviews stating that the NRMA commentary was not only incorrect but it was reckless. It created a significant risk of unnecessarily fuelling customer aggression in the workplaces of the 52,000 Australians who work diligently to keep fuel flowing for motorists”, said Mark.
ACAPMA plans to raise the NRMA conduct at the next meeting of the ACCC’s National Fuel Consultative Committee Meeting, with a view to reinforcing the need for responsible fuel price commentary by all actors in the national fuel price discussion – in line with the ACCC’s previous commentary on this matter.
Had ACAPMA wanted to be as mischievous, we might have responded by calling for a national review of whether the current rate of car insurance and road service premiums charged by Australia’s motoring clubs are ‘fair and reasonable.’
Hmmm. Now there’s a thought.
ACAPMA
Source: https://acapmag.com.au/2022/09/rolled-gold-nrma-nonsense/.
