The results of the Australian Competition and Consumer Commission’s (ACCC) investigation of regional petrol prices in Launceston (Tasmania) were released this week.
A copy of the report can be downloaded at http://www.accc.gov.au/publications/petrol-market-studies/report-on-the-launceston-petrol-market.
The accompanying media release stated that “More competition and increased transparency was the key to driving lower petrol prices in Launceston” – a statement that did not appear to be wholly supported by our reading of the detailed report.
“In fact, the report showed that the vast majority of the 12cpl differential that was observed in the study could be rightly attributed to the higher transport and operational costs of services a small regional fuels market”, said ACAPMA CEO Mark McKenzie.
The study concluded that around 10cpl of the 12cpl differential in Launceston’s petrol prices was due to higher transport costs and retail operating costs – with the remaining 2cpl being due to a reduced level of competition.
“Once again, the study’s findings about lower intensity of competition are hardly surprising and are typical of any regional retail fuel market in Australia, said Mark.
“You simply cannot argue that with the ACCC’s suggestion that more competition will likely deliver lower prices but regional markets simply do not have – and will never have – the same level of competition as a large capital city market”, added Mark.
“We are, however, surprised with the ACCC’s other headline proposition that more transparency will lower fuel prices”, said Mark.
At present, there are three commercial providers of fuel price information into the Australian (including Tasmanian) market. These can be readily accessed via the ‘apps store’ by any motorist in the country.
Providers of these systems include Motormouth (https://www.motormouth.com.au/), Gas Buddy (http://gasbuddy.com.au/) and PetrolSpy (https://petrolspy.com.au/map/latlng/-33.8657305/151.20732999999996)
“Any motorist in Tasmania can access this information for free and we have always encouraged their use”, said Mark.
Motoring Associations like the RACT, however, must pay for bulk information from these providers.
A government run system like the one newly introduced into NSW, however, would likely result in RACT receiving this information for free.
“We suspect that this may be why the RACT has come out so hard in favour of the ACCC’s recommendation on increased transparency, by calling for the Tasmanian Government to spend public money on a government-run system that duplicates the systems already in the market”, said Mark.
ACAPMA has no problem with price transparency.
In fact, we welcome it.
That said, there is nothing that we can see in the ACCC report that justifies any call for scarce State Government funds to be used to duplicate the numerous systems that are already in place.
“Surely the Tasmanian government has got more important things to spend public funds on”, said Mark.
On a related matter, the other element of the ACCC report that is surprising is the unequivocal assertion that the RACT deal with United Petroleum has somehow introduced increased competition in the Launceston market.
This statement was made despite the fact that the RACT/United Petroleum agreement has been in place since February 2016, yet a change in price competition has only been apparent for the last two months – a fact openly acknowledged in the ACCC report.
“Our information is that retail margins have tightened up generally and we do not believe that this movement can be credibly assigned to any single factor such as the RACT deal”, said Mark
“Further, we are deeply suspicious of motoring club petrol deals such as the one being progressed by RACT with United Petroleum”, said Mark.
Put simply, there is a need for the nature of these arrangements to be very transparent to the community, if the RACT is to genuinely maintain its impartiality with respect to commentary on petrol prices and fuel retail market competition in the future.
“Teaming up with a single fuel retailer really brings into question the potential ability of RACT (or any motoring club) to provide objective commentary when it is ‘in bed’ with a specific fuel retailer”, said Mark.
“It is interesting to note that in the RACT’s media comments this week, it appears that the only retail brand that wasn’t criticised was United Petroleum”, said Mark.
Regardless of the above, the real problem with the RACT’s call for the introduction of a system like the Fuel Check system that has this week been introduced into NSW is that these systems bring costs to the industry – costs that must ultimately be passed onto motorists.
“So, in effect, the RACT calls amount to a risk of government intervention that potentially will increase average petrol prices for Tasmanian motorists in the future, said Mark.
Surely the more prudent thing would be to monitor the efficacy and impacts of the NSW Scheme over the next 12 months before making any call for the system to be introduced elsewhere.
But then what would we know.
We are only the ones who actually market fuel in every capital city and regional fuel market in Australia.