Petrol retailers, says the ACCC, should not use the current pandemic to further increase profits. Instead, they should pass on the full benefit of falling oil prices to motorists.
According to the ACCC, weekly average international crude oil prices have decreased by around US$50 per barrel since the beginning of the year. This, says the organisation, has “largely” flowed through to Australian wholesale petrol prices, which have decreased by around 50 cents per litre (cpl) in the same period.
Over the same period, it is said that seven-day rolling average petrol prices across the five largest cities (ie, Sydney, Melbourne, Brisbane, Adelaide and Perth) have decreased by around 45 cpl. These cities have regular petrol price cycles, says the ACCC, which makes it difficult to assess the exact flow through of falls in international crude oil and refined petrol prices in the short term.
“The drop in the crude oil price is good news for the Australian motorists. At this time, the Australian economy needs all the assistance it can get, and lower world crude oil prices are one of the few positives from current world events,” says ACCC Chair Rod Sims.
“In the larger Australian capital cities, petrol retailers took too long to pass on the savings from the rapid drop in international oil prices, and this did not reflect well on them.”
Regional prices
In Hobart, Canberra and Darwin as well as many regional locations, the ACCC says retail prices have been much slower to come down and the extent of the falls has varied widely.
Fuel prices are said to be generally higher in regional Australia due to several factors. These include lower population and demand, meaning there are fewer petrol stations, which often leads to less competition. There are also higher costs for transport and storage of fuel, and less convenience sales which can support the operation costs of petrol retailers when fuel prices are low.
Price changes in regional centres, says the ACCC, can lag up to six weeks behind changes in the larger capital cities, because the turnover of stock is generally lower in the country. The reduction in demand for petrol due to current travel restrictions may have further exacerbated the lag.
“We have previously found that the lack of vigorous and effective competition in some regional locations was a major reason for higher prices in those locations,” says Mr Sims.
Competition leads to lower prices
Where there is competition, says Mr Sims, you tend to see lower prices.
“Giving your business to outlets that are pricing competitively sends a strong message to those that have high prices that they will lose your business,” he says.
“We recommend motorists compare prices on fuel price apps and websites, such as MotorMouth and the government schemes in NSW, WA and the NT, which also provide information on retail prices in regional locations.
“Especially at this difficult time, retailers must not take advantage of the situation to increase their profits but should pass on savings to motorists.
“The ACCC’s role is to monitor the market closely, and we will continue to do this, particularly to keep the pressure on the petrol retailers at this time.”
