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Wednesday, November 25, 2020

Petrol retailers urged to pass on savings as oil prices fall

As oil prices fall, the Australian Competition and Consumer Commission (ACCC) is urging petrol retailers to pass on the full benefit to motorists.

“Especially at this difficult time, retailers must not take advantage of the situation to increase their profits, but should pass on savings to motorists,” ACCC Chair Rod Sims said.

According to the ACCC, weekly average international crude oil prices have decreased by around US$50 per barrel since the beginning of the year and this 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, seven-day rolling average petrol prices across the five largest cities – Sydney, Melbourne, Brisbane, Adelaide and Perth – have decreased by around 45 cpl.

Petrol retail prices have been much slower to come down in Canberra than other major cities and the extent of the falls has varied widely. Image taken on 15 April. Photo: Kerrie Brewer.

In Canberra, Hobart and Darwin, as well as many regional locations, retail prices have been much slower to come down and the extent of the falls has varied widely.

Price changes in regional centres can lag up to six weeks behind changes in the larger capital cities, because the turnover of stock is generally lower in country areas. The reduction in demand for petrol due to current travel restrictions may have further exacerbated the lag.

More broadly, the ACCC said fuel prices are generally higher in regional Australia due to a number of factors, including 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.

Mr Sims said the lack of “vigorous and effective” competition in some regional areas was also a major reason for higher prices in those locations. He encouraged motorists to give their business to outlets that are pricing competitively and suggested comparing prices on fuel price apps and websites.

“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.”

Liberals want to end petrol pump pain

As the ACCC warns petrol retailers not to use the current pandemic to further increase profits, which the latest ACCC petrol industry report shows have risen in recent years, the Canberra Liberals are pushing to end the petrol price rip-off.

“Even when petrol prices around the world are plummeting, Canberrans are still being disadvantaged with disproportionately higher petrol prices,” Canberra Liberals leader Alistair Coe said.

“Even in Goulburn and Yass right now, some petrol stations are offering petrol a full 10 cents cheaper than what’s widely available in Canberra.”

Mr Coe said there are a range of measures the ACT Government can implement, such as real-time petrol price monitoring, improving business competition, reducing taxes and stopping daily price gouging.

“We need to look at ways to alleviate harmful taxes which are inevitably passed on to motorists, and red tape reduction to attract and strengthen competition,” he said.

“Reforms are needed to help make Canberra’s petrol market more predictable and transparent, giving Canberra motorists a fairer deal and greater consumer confidence.”

Mr Coe said if Labor is prepared to come to the table to implement reforms, they are prepared to consider it on the next sitting day.

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Petrol prices fall amid COVID-19 crisis

Ian Cubitts
Ian Cubitts