Xavier La Canna, 18 January 2016

The Northern Territory could look at producing its own fuel to support residents, shipping and resource industries hit by diesel prices that are way above the national average, Chief Minister Adam Giles says.

Mr Giles today took to the airwaves to criticise fuel companies, saying they had been unfairly keeping diesel prices high in the NT.

He said he had given the companies 10 days to explain themselves.

“I spoke to some fuel companies yesterday and expressed my concern to them and said we are not going to be in this position where every time the price gouging continues that I have to make a phone call to you blokes to start dropping your prices,” Mr Giles told 105.7 ABC Darwin.

“I wrote to them last week, and have given them 10 days to come back and respond and let us know why the price of diesel is the way it is and if it’s not reasonable we will take further action.”

He outlined some of the steps his government could take.

“If we need to start looking at producing our own fuel in the Northern Territory, particularly to support residents but also to support resource and shipping industries, I think that is an area where we can go towards or move towards to help secure fuel-pricing structures for the Northern Territory,” Mr Giles said.

A spokesman for Mr Giles later said preliminary thinking was underway on the viability of local fuel production in the NT and in the future it may be possible for the private sector to refine fuel from oil found in conjunction with the jurisdiction’s vast natural gas deposits.

“Essentially a lot of what we are doing is making fuel companies know we are capable of coming up with creative ways to push fuel prices down,” the spokesman said.

He said it was a long-term strategy that would involve putting the policy settings in place and the Government perhaps underwriting projects so private operators could build a local refinery.

Diesel prices higher in Darwin than other capital cities

Meanwhile the NT’s draft Fuel Price Discosure Bill was ready to enter Parliament, Mr Giles said.

“[The legislation] should force fuel companies and stakeholders to declare their pricing structures, he added.

Unleaded prices in the Northern Territory were among the cheapest in Australia, Mr Giles said, but diesel prices were still well above other jurisdictions.

Data from fuel price monitoring group MotorMouth showed that on Sunday the price of diesel in Darwin was 134.1 cents per litre (cpl), compared to 117.1cpl in Melbourne and 117.9cpl in Sydney.

In Alice Springs the price of diesel fuel was 138.9cpl and it was 135.2cpl in Katherine.

For unleaded petrol, the price in Darwin was 125.1 cpl, while it was 110.8 cpl in Melbourne and 112.9cpl in Sydney.

AANT concerned at high prices

Chief executive of the Automobile Association of the Northern Territory, Byron Henderson (AANT), said he was concerned about diesel prices, which remained stubbornly high despite cuts to world oil prices.

“Diesel is the one we have concern with at the moment … we are certainly not seeing the savings being passed on from that price cut,” Mr Henderson said.

“We are comparable to some of the smaller cities, like Canberra and Hobart for example, but we are way, way ahead of Adelaide and some of the bigger cities like Melbourne and Sydney.”

Mr Henderson was unaware of any plans by the Government to investigate building a refinery in the NT, and said the closest refinery was currently one in Western Australia.

The Australian Competition and Consumer Commission (ACCC) last year investigated Darwin’s high petrol prices and found the NT Government’s fuel supply arrangements may have contributed to consolidation in the local retail market.

Darwin service stations made about $1.2 million net profit each year, compared to about $100,000-$200,000 each year in Adelaide, the ACCC found.

In October 2014 the NT Government hosted a fuel summit that showed evidence that retail prices in Darwin for fuel were about 27clp higher than other capital cities.

Extracted in full from ABC News.