Lack of competition driving high Brisbane petrol prices

The ACCC has released the findings of its study into the Brisbane petrol market, which shows a lack of competition is causing Brisbane motorists to pay more for petrol than those in Sydney, Melbourne, Adelaide and Perth.

Between 2009-10 and 2016-17, Brisbane motorists paid 3.3¢ per litre more for petrol on average than motorists in Australia’s other four largest cities.

ACCC Chair Rod Sims says the report confirms Brisbane drivers’ suspicions that “they are paying too much for petrol, and that some local fuel retailers are enjoying high profit margins at their expense”.

“The high retail prices and margins for petrol in Brisbane have cost motorists there around $50 million per year more than their interstate counterparts since 2009-10,” he said. “This is despite wholesale prices in Brisbane being similar to those in the other four largest cities.”

The report found that the average net profit per site in Brisbane was significantly higher than the average net profit per site across Australia. In 2015-16, for example, in Brisbane it was around 55 per cent higher.

According to the report, retailers in Brisbane achieved higher margins and profits due to weak retail competition. Over the first four months of 2017, the difference between retail prices and wholesale prices at the bottom of the price cycle was substantially higher in Brisbane than Sydney. This was also true at the peak of the price cycle.

The report found that over the first four months of 2017, the extent of aggressive retail pricing by independent chains was significantly lower in Brisbane than Sydney.

“Independent chains can be competitive price setters in large metropolitan markets, and their absence means that prices are otherwise higher,” Mr Sims said. “There are only four independent chains in Brisbane: 7-Eleven, Puma Energy, Freedom Fuels and United.

“By comparison, Sydney has seven independent chains, some of which explicitly state their aim to sell competitively priced petrol. A key reason that Brisbane prices are higher than other capital cities is the lack of independent chains.”

The report shows that in Brisbane, the four lowest-priced retailers were on average only around 1.3¢ per litre below the market average price, while in Sydney the four lowest-priced retailers were on average around 3.8¢ per litre below the market average price.

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