The peak representative body representing service station operators in Australia has responded to the ACCC’s Report on Cairns petrol prices by suggesting that Governments need to make it easier for new businesses to enter regional fuel markets – as opposed to spending taxpayer funds on duplicating the various fuel price reporting schemes that are already in place.

Earlier today, the ACCC issued a report detailing the findings of an in-depth investigation of petrol prices in Cairns.

Key amongst the findings of the ACCC Report was the fact that average petrol prices in Cairns were higher than average fuel prices in Australia’s capital cities – as well as being notably higher than neighbouring smaller towns in far North Queensland.

The ACCC concluded that the principal cause of higher average petrol prices in Cairns was a low intensity of competition and that the all participants in the Cairns fuel market were operating in accordance with Australian Competition Law.

“The ACCC’s Cairns Report is yet another indication that petrol prices in regional markets are typically higher than capital city markets, due to a combination of higher transport costs and lower intensity of market competition than capital cities”, said ACAPMA CEO Mark McKenzie.

The Australasian Convenience and Petroleum Marketers Association (ACAPMA) cautioned against raising community expectations that the issue could be solved by introducing compulsory price reporting schemes – such as the NSW Fuel Check Initiative.

“We cannot see how using taxpayer funds to duplicate existing industry-based price reporting schemes will address issues that relate to the structure and intensity of market competition in Cairns”, said ACAPMA CEO Mark McKenzie.

“A better solution would be to directly address the current disincentives to service station investment in regional markets like Cairns, said Mr McKenzie.

The Association suggests that the protracted nature of planning approval processes for new sites – coupled with uncertainty over future margins created by ever increasing compliance costs – is making new investment in service stations wholly unattractive.

“The establishment of a new regional service station will typically require a business to invest $4M to $5M before earning their first dollar from fuel sales, with a high degree of uncertainty about how long the approval process will take, said Mark.

“Rising compliance costs associated with ever increasing regulation also mean that the future financial returns from making such large investments are unknown even before the site commences operation”, said Mr McKenzie.

“The reality is that the intensity of market competition will always be lower in regional centres than in capital cities, said Mr McKenzie.“But in substantial regional centres like Cairns, local and State/Territory Governments can work to enhance fuel industry competition by making it easier for businesses to invest in new service station sites”, said Mr McKenzie,“We support measures that genuinely increase market competition – in fact we encourage it because it serves to increase the reputation of our industry in the eyes of the community”, said Mr McKenzie.
“Using taxpayer funds to duplicate existing price information apps like Motor Mouth and Gas Buddy is unlikely to resolve problems of competition intensity in places like Cairns”, said Mr McKenzie.

“Our industry is ready and willing to work cooperatively with the Queensland Government, relevant local councils and other stakeholders to address the current barriers to the establishment of new service station sites in regional markets like Cairns”, Mr McKenzie concluded.

Media Inquiries

Mark McKenzie (CEO, ACAPMA)
M| 0447 444 011
E| markm@acapma.com.au

About ACAPMA

ACAPMA is the national peak body representing the interests of the petroleum distribution and petrol convenience retail industry. The scope of our membership extends from ‘refinery gate’ through to the forecourt of Australia’s national network of service stations and petrol convenience outlets – including fuel haulage, fuel distribution and fuel retail businesses.

The profile of our membership varies from small Australian businesses, medium Australian-owned enterprises, to large Australian corporations.

SHARE THIS ARTICLE: