Fuel-price-reporting laws don’t work says OECD

Perhaps one of the biggest frustrations for fuel retailers is the never-ending and circular debate that surrounds average petrol prices, writes ACAPMA.

The debate has been raging for so long, with so little fact, that you really must ask whether consumers are even listening anymore – particularly as they move increasingly to focus on the total convenience and fuel offering provided by competing fuel retailers.

Despite more than a decade of definitive competition investigations conducted by the ACCC – investigations that have largely given the Australian fuel retail industry a ‘clean bill of competition health’ – state and territory governments continue to interfere in a national retail market that they simply don’t understand.

“The problem with introducing new regulations in a complex and openly competitive market that you don’t understand is that these regulations can deliver negative consumer and competition consequences,” ACAPMA CEO Mark McKenzie said.

“The Western Australian Fuel Watch program and the more recent NSW Fuel Check initiative are two cases in point.”

A recent study commissioned by the Organisation for Economic Co-operation and Development (OECD) investigated the outcomes from government laws compelling fuel retailers publicly to report fuel prices – as distinct from industry programs such as MotorMouth and consumer programs such as GasBuddy.

“This is of course in addition to the fact that, unlike most other industries, the price of all products at our retail sites are clearly visible prior to the customer even entering the site,” Mr McKenzie said.

The OECD study examined the implementation of compulsory fuel price reporting laws around the world, including the WA Fuel Watch regulation.

The study concluded that compulsory-fuel-price-reporting laws do not deliver any discernible consumer benefit and that, in most cases, they actually deliver reduced industry competition and/or small but significant increases in average fuel prices for motorists.

The findings certainly won’t surprise anyone in our openly competitive fuel industry – as public accessibility of real-time fuel-price information means that this real-time pricing information is as accessible to market participants as it is to consumers.

“Blind Freddy could have told Australian governments that investment in such schemes is a waste of taxpayer funds, but unfortunately, these governments would have likely responded by suggesting that the industry was opposed to the new laws because it feared increased market transparency,” Mr McKenzie said.

“This issue was, and continues to be, a no-win argument for our industry.”

But given that a deeply respected international authority has now undertaken comprehensive research that points to the fact that these laws simply don’t work, our attention turns to how Australian governments will respond.

“Will these governments review their current approach or will they merely push ahead with the expenditure of taxpayer funds on laws that have been demonstrated to have no material benefit – other than providing Australian politicians with political leverage?” Mr McKenzie said.

“While it might not be gracious to point out errors in judgement, the simple response of our industry to the findings of the OECD report on compulsory-fuel-price-reporting laws is ‘we told you so’.”

This is an edited version of an article originally circulated by ACAPMA on July 14, 2017.

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