David Nankervis, 05 November 2015

PETROL retailers have been accused of a “blatant cash grab’’ by the RAA after pumping up prices paid by motorists at the bowser by almost 60 per cent.

Prices have been inflated so much that motorists in Adelaide’s outer northern suburbs have been paying the same average price for petrol as those in Ceduna for the past three months, the RAA said.

The state’s largest motoring organisation has called on the national consumer watchdog to put pressure on retailers to provide fairer prices for Adelaide motorists.

“In the past motorists were not facing such excessively high prices for so long,’’ RAA senior analyst Chris West said.

An RAA survey shows the average gap between pump prices and wholesale prices has jumped 58 per cent in the past three months compared to last financial year.

Mr West said the higher margin and profit windfall is being driven by changes to Adelaide’s petrol pricing cycle.

The survey shows prices were now peaking around 24c/l above wholesale costs, compared to 16c/l last financial year

While prices were staying higher for longer the level of discounting had also been reduced, the survey of more than 160 service stations revealed.

Unleaded prices have also varied on average by up to 16c/l across Adelaide suburbs since July.

Mr West blamed a lack of competition among retailers for the price gouging.

“Much of this price increase can be attributed to Caltex, who have increased the price cycle spike from 16c/l above cost price to upwards of 24c/l above cost price,’’ he said.

“There’s also unwillingness from the other major brands to aggressively challenge this move, instead they’re adopting a similar approach.’’

Mr West said this kept pump price margins at an inflated level for longer.

“And on most occasions when the major retailers have challenged the spiked price, they have still proposed a price reaping retail margins of at least 20c/l,’’ Mr West said.

Adelaide’s unleaded price averaged 133.4c/l on Wednesday, compared to a cost price of 113.4c/l.

Caltex spokesman Sam Collyer said a greater margin “between what the retailer pays and charges customers increases the retailer’s opportunity to make money’’.

“I guess what motorists don’t see is the cost of running the service station, paying for staff, meeting regulatory requirements, marketing the site, doing upgrades and making it more modern,’’ he said.

“There will be times where fuel is sold at lower margins — especially in Adelaide where prices remained low for longer periods.’’

The RAA survey of prices between July and September revealed unleaded prices varied on average by up to 16c/l, with fringe northern suburbs drivers paying the most.

“Motorists in the outer north were basically paying the same amount for petrol as Ceduna,” Mr West said.

“The main difference between the best and worst performing regions in Adelaide is a lack of

competition, leaving the fuel cycle’s spike price to remain in the outer north much longer.”

Mr West said the Australian Competition and Consumer Commission should investigate the changes to petrol pricing in Adelaide.

“We want the ACCC to look at Adelaide petrol prices because country prices have benefited from ACCC scrutiny (earlier this year),’’ he said.

Adelaide’s smaller independent fuel retailers were “bucking the trend’’ of inflated price spiking, the survey found.

they did this by either not matching the major retailers spike price or cutting their peak prices more rapidly, Mr West said.

The survey also showed 13 of the cheapest 20 petrol prices available were charged by small independents.

Despite ColesExpress’ past decision to not provide its prices to RAA’s website, Mr West said the RAA manually “collected prices to provide a more transparent picture as to how competitive they were compared to the other brands’’.

“Overall the small independents were the cheapest, whereas Caltex and On The Run were the most expensive,” Mr West.

A comparison of the supermarkets showed Woolworths’ sites were cheaper on average compared to ColesExpress.

Although Costco’s outlet at Kilburn has been open a year, it’s still offers the cheapest

price of all fuel outlets in Adelaide.

Mr West said Costco’s pricing policy “was keeping prices down at the nearby Coles Express, Caltex Woolworths, United Petroleum and BP On The Run’’.

Extracted in full from The Australian.