18 December 2015

The industry representative body says the current retail fuel prices are below the ‘dizzy heights’ of previous years

The Australasian Convenience and Petroleum Marketers Association (ACAPMA) has brushed off claims of unfair pricing sparked as a result of the Australian Competition and Consumer Commission (ACCC)’s third quarterly report that indicated a healthy profit margin for the fuel industry in the September quarter.

While the ACAPMA, which represents the interest of petroleum distribution, petroleum wholesaling and petroleum retailing businesses in Australia, acknowledges the profit margin, it rejects claims of ‘price gouging’.

“Our industry accepts that people don’t like paying more than they have to for their fuel but it also needs to be acknowledged that current retail fuel prices are actually well below the dizzy heights they reached a few years ago,” ACAPMA CEO Mark McKenzie says.

The fuel business “is like any other retail business [where] good operators will charge the highest practical price that the market will bear and that retail competition will permit in order to ensure the long term sustainability of their business.”

McKenzie argues that the ACCC should focus on “whether the competitive fabric of our industry is sound as this is the best mechanism for ensuring that fuel prices remain reasonable into the future.”

Remarking that this discussion is part of the annual talks on fuel price that kicks off each year before the Christmas and New Year break, McKenzie says “this current period of healthy margins follows a number of years of some of the lowest retail margins in history, as evidenced by ACCC fuel industry reports prepared over the last three years.”

“Over the last eight years, the ACCC has undertaken numerous in-depth studies [based on] our industry and has not found any substantial issues with respect to the competitive conduct of market participants and this latest report is no different,” he says.

McKenzie also points out that the ACCC Report “fails to acknowledge that gross profit margins vary markedly – with some fuel retailers still receiving an average of just three cents per litre.”

Earlier this week it was confirmed that Australia’s competition regulator is planning to scrutinise petrol companies for evidence of price gouging after gross retail margins hit a record level.

The ACCC’s report on petrol prices for 2015 found that consumers paid an average of 11.8 cents per litre more than the wholesale price in the September quarter.

Extracted in full from ATN.