ACAPMA CEO Mark McKenzie joined the 4BC Drive program recently, and used his first media interview to discuss some of the misconceptions around fuel pricing in Queensland.
As petrol prices continue to fluctuate nationwide, one prominent motoring body accused some Queensland service station operators of price gouging given a high level of variance in board prices in and around the Sunshine Coast.
Following stories that some fuel retailers had more than doubled their margins within the last week McKenzie explained that ‘the idea that there is a uniform price margin is flawed’, McKenzie went on to say ‘many service stations are stand-alone businesses that operate with different cost structures. These businesses act independently. They are all structured in different ways, sell different volumes of fuel, and therefore their profit structures are highly variable’.
Source: Audio provided by 4BC and Magic 882 Radio
As reported by the ACCC Monitoring of the Australian Petroleum Industry, released in December 2014, the larger factors which make up the price of fuel are taxes (34%) and the benchmark prices at which fuel is purchased (54%). These two variables combined equate to roughly 88% of the total cost of fuel and are, for the most part, outside the control of fuel retailers in Australia.
The remaining 12% of the fuel price is made up of variables which are borne by both the wholesale and retail segments of the market and include wages, cartage, storage, insurance costs, both wholesale and retail margins and other variable costs to businesses.
As outlined within ACAPMA’s policy framework for 2015, ACAPMA believes that the affordability of transport fuels is best achieved through fair and effective competition across the total downstream petroleum supply chain.
‘That is the nature of a competitive market! When competition is fierce, everyone pulls their belts in, and they bring their margins down’, McKenzie stated. ‘If I have a petrol station and I want to charge $2.50 a litre, I can actually do that. I might not get any customers though, because my competitors will offer a better price’.
While petrol is seen as a ‘grudge purchase’ the strong level of competition in certain suburbs and regions allows consumers the opportunity to shop around and look for the best price that suits them.
ACAPMA is committed to working with members, industry stakeholders and Government to ensure that there is a stable competitive environment within the downstream petroleum market, in order to encourage reasonable fuel prices throughout Australia.
We are also committed to promoting a greater community understanding of the relatively small role that fuel retail outlets have in the price levied for the sale of fuel at the bowser
If you wish to know more about ACAPMA’s Policy Framework for 2015 please feel free to email firstname.lastname@example.org or call ACAPMA on 1300 160 270.