Petrol prices fair says ACCC
December 22, 2008 by Matt Brogan
The Australian Competition and Consumer Commission (ACCC) have released their findings of the first annual report into petrol prices and say that prices here have closely followed international trends, and says they are indeed fair.
The report also suggested that Australian petrol prices were comparatively low by international standards.
The report has enabled the ACCC to further explore factors influencing petrol prices, and the industry’s profits, costs and revenue, after releasing recommendations from its 2007 petrol price inquiry. For reference, prices in Australia closely follow the price of Singapore Mogas 95 (95RON petrol), which is used as the regional benchmark for prices.
“Movements in Australian petrol prices are overwhelmingly determined by international petrol prices,” ACCC commissioner Joe Dimasi said in a statement, “Between mid-July and mid-December retail prices had fallen by at least as much as Mogas prices had fallen.”
There was however some discrepancy in pricing between December 2007 and October 2008 where petrol prices did deviate quite sharply from the international price for a short period. The ACCC found the deviations were due to “supply issues” in New South Wales, Victoria and Queensland, an increase in international freight costs, volatility in the Singapore Mogas 95 index and fluctuations in the value of the Australian dollar.
City and country petrol prices were also examined, with prices in rural areas (and the three smaller capital cities) six to seven cents per litre higher than the five largest metropolitan cities. Pricing differences were due to a combination of factors including higher transport costs, lower volumes and less competition in the regional centres.
The report also confirmed findings from the 2007 petrol inquiry which found the petrol industry was concentrated at the refining and wholesale levels. New competition in the market faced significant barriers from current arrangements by the oil companies and the “low potential” for large-scale independent importing.
During the year, petrol retailers had also seen substantial cost increases primarily reflecting crude oil costs and wholesale petrol costs while industry profitability had not increased despite petrol price increases. Profitability levels more generally didn’t appear to be higher in comparison to other industries.
The Federal Government has asked the ACCC to produce two more annual reports into petrol prices within the next two years.
Print it: 
Here we go again from the ACCC dragging out the same old funnel to pour the same old dribble down our throats and expecting us to believe it. They will never learn.
Using simple maths how is it when petrol was around $150 per barrel we were paying around $1,70 per litre, now petrol is around $43 per barrel and still paying around $1.00 per litre. The barrel price drops by two thirds and the pump price by a little over one third. It does not add up to me.
I would also like to know just who this OPEC mob exactly think they are and why they think they should dictate to the world how much we should pay for petrol? I was just reading the other day the petrol price has gone down too much because demand has gone down (reduction in profits to them too) so now they will reduce production which will put the prices back up again? Why??? For that matter since we produce most of our own why do we not jsut remove ourselves from this world parity pricing thing and set our own prices???
TuffGuy
Here, here. Also Australia has some of the largest gas reserves. Why are we not capitalizing on that?
what about diesel???its only 40c p/ltr too dear now.rip off…
I don’t understand why people don’t believe the ACCC ???
TuffGuy: You’re forgetting that the AUD has lost 24% against the SGD which if I’m not mistaken is where we source most of our petrol from.
If you take this in to account then the 50 cents it has dropped in price and the 24% the AUD has lost in value then the price of $1 in which petrol is selling for today is pretty fair.
Diesel in Australia is simply more expensive because we don’t yet have the large market for it that exists in the EU for it.
If more people take it up then I’m sure it will drop in price and be more comparable to the price of unleaded.
Gents,
Please don’t overlook the following when determining about whether we are being ripped off:
* devaluation of Australian dollar against USD; and
* increases in oil refiners’ costs. I see that Caltex is struggling financially at the moment.
The downside of lower petrol costs remains largely unchanged, too. I still cannot get over the number of 4WDs on the roads here in Melbourne. At least with higher prices, we were seeing a shift to more economical cars which are kinder to the environment.
Anyway, just a couple thoughts, folks.
Cheers,
Stephen
Once again the ACCC has shown that it doesn’t have any Balls or any teeth – which could be why virtually all of the ACCCs findings SUCK.. they’re simply too scared of the multi-nationals; afraid to make any changes despite having more legaslative powers etc than any other government agency.. with the exception of the ATO and Centrelink.
Yianni,
If diesel becomes more popular the price would go up.
yianni,
diesel is cheaper to produce than petrol.it’s got bugger all to do with demand(and a few trucking companies might disagree).explain why it was cheaper(forever)up till 2 years ago.one “expert”i talked to tried to tell me it’s because of the lower sulphur content now.i don’t buy that either.diesel is still cheaper to refine than petrol,its just that not as many people winge about it.look at todays decision to drop the bus tax(voters power).
this report was appears to have been conducted and presented in a different economy.
the obviously did their study before the prices fell, so the newly released findings are irrelevant.
Tuff Guy,
another reason is that the oil doesnt turn itself into petrol.
There are also fixed costs associated with making petrol, such as wages, plant operating costs and profits.
Sure oil might go down by 2/3rds, but the cost of wages etc remains constant
i dont know exact figures, but im going to blow it up a bit…
say 1 litre of fuel @ 1.30L has 60c of wages and other costs in it, and 70c worth of oil.
if the oil cost halves, its still 60c for wages and other fixed costs, plus only 35c for the oil content = 95c.
the real investigation should be on diesel and LPG prices.
for starters why should LPG prices follow unleaded price spikes???
and how come now that petrol has dropped considerably, LPG either hasnt, or only barely.
Australian
Coverup for the
Corporations
Commission
Diesel is priced higher than petrol because of the rediculous taxes the fed gov put on it to rake in money from trucking companies.
LPG should be exploited more, but the n the gov will just tax the crap out of that too!
Yep we’re getting ripped
falcodore,
but only up to 12.5cpl as outlined, over a 5 year phase in period
Its pure econmoics as to why we have to pay more for diesel. There is not capacity in you market and others to refine enough diesel for demand. Bear in mind from a barrel of oil it produces about 19% Petroleum and only 9% diesel plus the balance of other products (heavy fuel oil, jet fuel, LPG and “other products”.
What I do not see is that diesel is only about 5% of the car market which would hardly dent the economics unlike the UK which is about 45% diesel orientated.
What I don’t understand is here in Perth we saw prices get as low as 95c/Litre….
the Following week, prices all of a sudden rise…not 1, 2 or even 3c/litre…from 95c…TO 108.9!??!?
Sure I understand its still low in comparison to past prices but with the dollar stable, oil prices still dropping, how on earth do Petrol companies justify such a dramatic leap in pricing?
ACCC=Toothless tiger!
reason the fuel in wa has rised is because its christmas
the cheapest i saw it yesterday was 98c got up into perth it was 105c fuel stations are ripping off the consumers
For those people saying that the dollar also influences the fluctuation of the petrol, you are completely correct… BUT… why was it back around 15 years ago when the Aussie dollar was still hovering around the 60c mark and price of oil per barrel was the same as it is right now, we were only paying 69.9c per litre and that was for leaded not unleaded. I know times have changed a bit since then but it’s worth considering.
15 years ago oil was about $20 a barrel not the same as now.
The current price is still very high by historical standards.
Thank you for correcting me SamR, I had a feeling the barrels might have been cheaper back then but I wasn’t quite sure. But you get my point anyway I hope. They are still ripping us off, we still shouldn’t be paying 0ver 85c per litre let alone $1.00 per litre.
Where ever tax is a issue the Govt can request reports from the ACCC and it means nothing.First and foremost the deal Howard signed with the china should at least be reviewed.I mean @ 2c/l unrefined is madness.Charge them the market rate our rate at the pump.No use the ACCC saying we are in the low end of petrol pricing.Mean diddle squat.We want cheap price simple as that.Nationalise the oil industry.
50cpl for life petrol
10cpl for life LPG
Good slogan for a political party.
Wake up before the world overtakes us AGAIN
Fair???? I paid 96.9 Wednesday morning, and filled up my brothers car for 114.9 the same night!!!
pfft..”fair”?
useless POS
the crude oil prices has dropped from $45 per barrel to $35 per barrel just last week
and do we see any decrease?instead it went up by like 10-20cents this morning..
i’ve compared with countries like malaysia and the states..and we are way high
some1 has to do something,this is outta control
and about diesel,i just dont get why isit dearer than petrol
diesel shud be cheaper because they are not as “refined” as petrol and thus the shorter process of it,which also means less cost to produce.
We had a report in the news here in Perth only a month or so ago where the Fuel Giants (BP, Shell, Caltex) freely admitted that the price of Diesel is higher and their reasoning behind it was simply, there is no market competition for it. To put it into context, their largest market is industry (Trucking, mining, etc) who buy massive amounts of the product, in some cases at a discounted rate, and the lowly car driver makes up the last 5-10% of their sales. As such, they stated there are no competitive market forces (read as: Enough users) requiring them to heavily “Discount” the pump price that we pay, hence they dont, and we pay more.
Simply really. A Wholes. It kills me every time I fill up…
I have a feeling that those directing negative opinions towards the ACCC may not have a total understanding of competition law in Australia.
It is not illegal to charge high prices.
Repeat after me: It is not illegal to charge high prices.
What is illegal is when oil companies collude and all agree to set high prices (price fixing) and this has been proven time and time again not to occur. Instead (especially in the eastern states where there is no fuelwatch) it is a market dominated by a few price leaders (usually BP) who choose to increase their prices in a cycle with the price followers usually changing their prices in line with the price leader within a day or so.
One more time: It is not illegal to charge high prices.
Other big prohibited practices under the TPA include resale price maintenance, exclusive dealing, primary and secondary boycotts anti competitive agreements to name a few, however none of these would apply to the petrol giants either.
For the record, the ACCC does not back down against multinationals, it recently put both Rio Tinto and BHP in their place against Fortesque metals, and also won in demonstrating price fixing between major airlines, including Qantas, Singapore Airlines and British Airways.
www .accc.gov.au/content/index.phtml/itemId/2332
The above is the website if you’re interested in all of the ACCC’s activities in the last 3 months.