A fuel pricing expert has called for a cap on petrol retailer margins as wholesale fuel prices fall but prices at the pump rise, hitting consumers ahead of Christmas.
Petrol price monitoring company Fueltrac’s chief Geoff Trotter said the consumer watchdog and governments need to stop the gouging of motorists.
Petrol prices in Melbourne and Sydney had fallen sharply over November as oil prices slumped globally. However, they have now started rising again, driven not by rising oil prices but by retailer margins.
“Governments talk about putting a cap on gas and electricity prices, so why not fuel?” Mr Trotter said.
“Why should motorists have to play a lottery with petrol prices.”
Fueltrac is a petrol price-monitoring agency whose data is being used by the Australian Competition and Consumer Commission to power its fuel price tracker.
The ACCC was unavailable for comment.
Mr Trotter said a price cap of about 12 cents – the three-year retailer margin average – would allow fuels companies to remain profitable without stinging consumers.
CommSec economist Ryan Felsman said retailers’ margins are now at record levels while wholesale fuel prices – what retailers pay – have fallen.
Earlier this week, the Australian Institute of Petroleum said the average petrol price rose 5.8 cents to 139.9 cent per litre last week but the average wholesale petrol price was only 115.2 cents a litre.
“Therefore, the difference – the gross retail margin – rose by 10.6 cents to reach a record high of 24.7 cents a litre,” Mr Felsman said.
“Filling up the car with petrol is the single biggest weekly purchase for most households, so the impact on consumer confidence and spending requires careful monitoring.”
He said a cap on retailer margins would be difficult to implement and better way to drop prices was for governments to lower their tax rates.
“While a cap seems like a good idea it would be challenging to carry out and police,” Mr Felsman said.
“A simple solution to lower prices is if the government drops its fuel excises, but it is difficult to wean the government off revenue.”
A BP said spokesman said there are a range of different factors impacting petrol prices.
“[These include] international product prices and competition between service stations in a local area. There are also other factors including exchange rates, taxes and local operating costs,” he said.
Caltex was approached for comment.
Mr Felsman said while petrol price had finally begun to fall after reaching a 10-year high in October, this short reprieve was now over.
“Prices of $1.20-$1.30 a litre appear to be in the rear vision mirror for most motorists in the near term, especially with OPEC and its allies announcing a cut in production in an attempt to stabilise the oil market,” he said.
“Motorists had enjoyed the lowest unleaded petrol prices since April in recent weeks.
“But pump prices have begun lifting in some capital cities for the first time in six weeks. And rising global crude prices imply further increases are likely in the weeks ahead.”
The price of petrol is slated to rise after oil cartel OPEC said it planned to reduce global supply levels.
Extracted from SMH