Regional petrol stations that fail to quickly pass on the benefit of lower global oil prices will be scrutinised by the competition regulator, which has found the difference between city and country petrol prices jumped last year as crude prices dived.

Petrol prices fell by an average 42.7¢ in the seven months to the end of January, consistent with the slump in international refined petrol prices, delivering a boost to household budgets.

But the Australian Competition and Consumer Commission’s report on the local petroleum industry shows that household gains of $1,000 over a year were unlikely because of the volatility in the international price of refined petrol, which is the main influence on retail petrol prices.

The bowser price falls would have been an average 5¢ a litre deeper had the Australian dollar not slumped against the US dollar at the end of last year.

The ACCC report also finds that many regional drivers were not benefiting as much as their metro counterparts, with the difference between filling up in the cities and the country jumping, particularly in NSW.

“The decrease in international refined petrol prices did not flow through to retail petrol prices in many regional locations to the same extent as it did in the five largest cities [Melbourne, Sydney, Brisbane, Adelaide and Perth],” it said.

“Between June and December 2014 retail prices in the five largest cities decreased by 28.1¢ per litre to $1.238 per litre.

“However, over the same period, retail prices in regional locations decreased by only 16¢ per litre to $1.413 per litre.

“As a result, the differential between average prices across all regional locations and average prices in the five largest cities increased considerably.

“For 2013−14 the average differential was 6.6¢ per litre, in the month of June 2014 the differential was 5.4¢ per litre, but by December 2014 it had increased to 17.5¢ per litre.”

After falling a further 14.6¢ to $1.092 a litre in January, retail petrol prices started to rise in February following a rebound in international petrol prices.

The ACCC said it would be monitoring whether the differential between average prices across regional locations and the five largest cities would narrow, as expected, in the remainder of the March quarter.

The watchdog noted that distance, less competition, fewer convenience store sales and less fuel sold might contribute to the higher prices in regional areas.

Jeff Rogut, executive director of industry body Australasian Association of Convenience Stores, said the industry was “aware of pressures from the regulator and tries to do the right thing by customers.”

The ACCC monitors fuel prices in all capital cities and about 180 regional locations.

Extracted in full from the Sydney Morning Herald.