Sid Maher, 16 February 2016
Motorists are paying as much as 13c a litre more at the petrol bowser as fuel retailers gouge “unreasonably high’’ profit margins, Australian Competition & Consumer Commission figures show.
ACCC chairman Rod Sims yesterday attacked the level of profits being made by retailers, telling The Australian he had written to retailers seeking an explanation for margins that were the highest in 14 years.
“Retail margins have been stubbornly high for a long time,’’ he said. “It clearly does reflect a lack of sufficient competition. It is a bit of a concern because it costs households a lot of money.’’
While petrol prices have been falling as international crude oil prices have plunged below $US30 a barrel, combined retail and wholesale margins are 13.7c a litre higher than they were a decade ago. Average petrol prices across the nation fell 8.8c a litre in the December quarter compared with the previous three months for an average national price of 124.4c.
“However, retail petrol prices were not as low as might have been expected given the level of crude oil prices,’’ Mr Sims said.
Part of the reason is that international oil refineries have doubled their margins from about $US8 a barrel to $US16 a barrel, which is outside the control of Australian authorities.
But gross margins for petrol retailers were 12.4c a litre, up 0.6c on the September quarter.
The 12.4c margin in the December quarter compared with a 3.7c margin in 2004-05, the last time crude oil prices were around $US38 a barrel.
The wholesale margin also nearly doubled from 5.7c a litre in 2004-05 to 10.7c, while the refiner margin increased from 5.5c a litre to 13.5 over the same period.
The ACCC action comes as crude oil prices have slumped below $US30 a barrel.
CommSec chief economist Craig James said unleaded petrol was averaging 96.6c a litre at the “terminal gate”, the lowest wholesale price for petrol in seven years.
“Motorists can expect that the cheaper wholesale prices will translate to lower prices at the petrol pump over the next fortnight,’’ he said. “More capital cities are experiencing petrol prices near $1 a litre and the price should remain low for the next few weeks.
“Some motorists will be scratching their heads about the lift in the national average petrol price over the past week. But this reflects the vagaries of the somewhat mysterious ‘discounting cycle’ in operation across southern and eastern capital cities. In Sydney and Melbourne, petrol was effectively selling below cost-price in early February before spiking around 20c a litre higher.
“Over the next fortnight petrol prices across Australia will trend lower in line with the wholesale price.’’
Compared with recent highs in July last year, the average household was saving about $33.50 a month on filling up the car with petrol, equivalent to a quarter per cent rate cut on a $225,000 mortgage, Mr James said.
Mr Sims believes ACCC court action could improve transparency in the petrol market and increase pressure for discounting.
The ACCC in December obtained enforceable undertakings for petrol retailers to provide prices in real time to consumers.
Mr Sims hopes the move will lead to the creation of apps that show all petrol prices in any area.
Extracted in full from The Australian.