PETROL prices across the country could rise despite falls in global oil prices as skyrocketing electricity and rents push up costs, retailers have warned.
The average petrol price during the three months to March was 129.1 cents per litre, according to the Australian Competition and Consumer Commission’s latest quarterly report, with prices in the five largest capital cities increasing by 7.1 cents per litre on the previous quarter.
The March figure, the highest average price since the September quarter 2015 when the average price hit 133.2 cents per litre, was blamed on a decision by the global oil cartel OPEC to restrict production.
But oil prices have plummeted about 20 per cent from their peak in recent months and are now lower than a year ago, largely due to increased output from US shale producers. Those falls have already started to filter into lower pump prices in Australia, with the national average sitting at about 117 cents per litre.
ACCC chairman Rod Sims said the watchdog would “absolutely” be keeping an eye on retailers to ensure oil price falls were passed on by retailers.
“Prices took a while to come down in this quarter, but I’d be disappointed if the June quarter average wasn’t 5 or 6 cents lower,” Mr Sims said. “The good news is that OPEC is losing its grip. Oil is well below $US50 a barrel now, and that’s fantastic.
“OPEC has cost Australian motorists hundreds of millions of dollars over the years, huge sums of money, and really it has been appalling that governments could get together and collectively hike the price of petrol for Australian motorists.”
But he said while prices at the moment were “pretty reasonable”, petrol retailers’ margins were about 4 cents per litre too high.
Gross retail margins — the difference between average retail prices and average wholesale prices — were 12.3 cents per litre in the five largest cities during the quarter, an increase of 1 cent per litre on the previous quarter.
The ACCC says increases in costs do not adequately explain the high margins, which it says should be about 7 or 8 cents per litre.
“We accept that over recent years their costs have probably gone up because of vapour reduction strategies at service stations, extra info on fuel boards, all of this sort of stuff, but our guess is that you can allow about a cent for that,” Mr Sims said.
“So if margins should be 8 cents, you could push it up to 9 cents to be generous, but they’re sitting at 12 cents.”
But Mr Sims said savvy motorists were taking advantage of petrol apps like FuelCheck, Motormouth and GasBuddy to buy at the right times and right places. “They’re actually outsmarting the service stations and getting good deals,” he said.
“If you buy at the bottom of the cycle versus the top, you can save yourself up to 20 cents per litre which is enormous.”
But according to Mark McKenzie, chief executive of ACAPMA, the national peak body representing fuel retailers, there was too much “fake news” about petrol prices.
“We’ve seen two very significant cost increases in the last 12 months,” he said. “The first is rents, for those who are leasing sites, between 40 to 50 per cent of retailers, their rental costs have gone up by 40 per cent in the first quarter.
“Energy, the third-biggest cost, has gone up between 80 to 110 per cent. What people forget here is we’re not a charity. These are businesses who have to recover their costs through the price of products they sell.”
He added that state governments were also contributing to the problem. “One of the biggest retailers in NSW has spent close to $200,000 per site complying with the government’s vapour recovery legislation,” he said.
“The ethanol mandate in NSW and Queensland is imposing costs of between $60,000 to $250,000 per site. You can’t just keep legislating and expect the industry is going to keep cutting its margins because it loves the government. Compliance adds costs.”
Mr McKenzie said there was “no evidence” for the ACCC’s claim that margins were too high. “All they’re doing is reporting on the variation between the wholesale and retail price and making a guesstimate,” he said.
“In our industry we see margins range between 8 cents and 17 cents per litre. Smaller retailers in particular still have the same labour costs and rental costs but much smaller fuel volume, two million litres a year compared with six million, obviously to survive you have to charge more per litre. That’s why people shop around.”
He encouraged consumers to shop around using fuel apps. “The retailers that are trying to do the right thing by keeping prices as low as possible say they don’t always get rewarded, because people aren’t just looking for fuel any more, they’re looking for convenience options as well.”
NRMA spokesman Peter Khoury said the motoring body was concerned about the impact of rising energy costs. “We are always concerned about the capacity of the independents to compete with the major players, because independents are the ones consistently putting downwards pressure on the majors,” he said.
“What you consistently see is the cheapest service stations are always independents, their margins are the lowest and that’s their strategy. The major players are always more expensive and have higher margins. Anything that could impact on that competition should be a concern to motorists.”
Extracted from News.com.au