Matt O’Sullivan, 15 February 2016

Motorists paid “unreasonably high” prices for petrol in the second half of last year, prompting the competition watchdog to demand answers from the country’s major petrol retailers.

The Australian Competition and Consumer Commission has found that motorists are still not benefiting fully at the petrol bowser from the plunge in global oil prices over the past year due to high refiner and retail margins.

The average price in the five largest cities – Sydney, Melbourne, Brisbane, Adelaide, and Perth – was 124.4¢ per litre in the three months to December, which was 8.8¢ lower than the previous quarter and 11.4¢ lower than in the June quarter.

While prices had dipped, the regulator said they had not fallen as much as might have been expected given the plunge in crude oil prices. In December, the price of Brent crude – the global benchmark – was at its lowest level in more than 11 years.

ACCC chairman Rod Sims said the consumer watchdog believed retail prices were unreasonably high in the second half of last year and early this month wrote to the chief executives of each of the major petrol retailers such as BP, Caltex, Woolworths and Coles seeking an explanation for the high margins.

“The players in the market should be explaining what is going on … [and] it doesn’t do any harm to let them know that we are watching,” he said.

The ACCC’s report for the September quarter showed that retailers’ average margin of 11.8¢ per litre in the country’s five largest cities was at its highest level since the regulator began monitoring petrol prices in 2002. And its latest report for the December quarter found the margin increased further, by 0.6¢ to 12.4¢ per litre.

Mr Sims said the difference between crude oil prices and international refined petrol prices was also high last year at about $US16 a barrel, compared with an annual average of about $US8 a barrel over the past two decades.

“These high refiner margins are outside Australian control,” he said.

“While international refined petrol prices are strongly influenced by the price of crude oil, they are also determined by their own global supply and demand conditions. As global demand for petrol was relatively strong in 2015, prices remained high relative to crude oil prices.”

The regulator said retail margins would face further downward pressure from May when motorists would be able to see petrol prices on a real-time basis at the same time as it was received by retailers.

The pricing information exchanged between petrol retailers such as BP and Caltex will also be available to third parties, including app developers and motoring and consumer organisations.

The release of the information is one of the outcomes of the ACCC’s recent legal case against against petrol retailers BP, Caltex, Coles, Woolworths and 7-Eleven, and the company they use to share price information, Informed Sources.

Mr Sims said making pricing information constantly available to motorists would allow them to make better purchasing decisions and create greater competition.

“We therefore hope it will lead to downward pressure on retail margins,” he said.

The NRMA said the regulator was right to highlight the fact that the gap between wholesale and retail prices was the largest it had been since at least 2002, despite recent global factors such as movements in refined petrol.

“It is a concern. Even though the prices are falling that gap … is still very high,” spokesman Peter Khoury said.

However, he said the motoring group expected motorists to benefit from petrol retailers passing on the benefits of falls in wholesale prices in the next week or so.

Extracted in full from the Sydney Morning Herald.