Retail pump margins at stations in some of the major markets through Australia are much narrower in the third quarter of 2017 than any time all year, OPIS Australia data reveals.
Petrol station profits have been under increasing scrutiny from the Australian Competition & Consumer Commission (ACCC) in recent weeks. In fact, Rod Sims, the ACCC Chairman, in a 13 September speech before the Asia Pacific Fuel Industry Forum recommended the use of fuel websites and apps as a mechanism to empower price-sensitive consumers and help drive more competitive markets in petrol retailing.
Sims also alluded to ACCC’s recent quarterly reports that have noted “margins being the highest they’ve ever been in real terms.” Sims acknowledges that retailers are facing higher regulatory compliance costs (New South Wales vapour recovery legislation and some ethanol mandates, for example) but “it is our belief that the increase in margins in recent years is well in excess of these costs.”
A press release from ACCC on 31 August said that “gross retail margins in real terms remain the highest since the ACCC began monitoring them in 2002,” alluding to second quarter 2017 profits.
“Based on our calculations, each extra cent per litre on the price of petrol costs consumers across Australia a total of around $180 million a year,” Sims believes.
The margin numbers calculated by OPIS Australia indicate things are changing for fuel retailers and the profit picture for 3Q2017 is not as rosy as one might think!
OPIS Australia examined petrol margins in five of the top consumption cities in Australia: Melbourne, Sydney, Brisbane, Adelaide, and Perth, examining average station margins versus TGP wholesale prices and also looking at profits during the current pricing cycles.
Third quarter petrol margins to date trail second quarter profits by a whopping 42% in Melbourne, by 11% in Sydney, and by 1% in Perth. Quarter-to-quarter margins to TGP Wholesale are essentially flat in Brisbane and are slightly higher in Adelaide, according to current data from OPIS Australia.
Looking at individual monthly margins from April through September to date, June proved to be the strongest of the months in all of the cities but Adelaide where very poor June and July profits have rebounded in August and September.
Inspecting data from the petrol pricing cycles that are characteristic of Australian markets there is a clear trend of tighter margins. Several of the markets are in the midst of a pricing cycle and the cycles are not yet complete but Melbourne, Sydney, and Adelaide reveal tighter margins. Brisbane is the only market that is trending higher at present.
Slimmer profits in Australia for the current quarter are part of a global trend for tighter profits as oil prices have been stronger and wholesale costs have risen as demand increases and supplies shrink.
If you would like to stay up-to-date on current petrol news, including daily unleaded and diesel spot, landed and retail prices, contact Oil Price Information Service (OPIS) on +1 301.284.2000/ +61 2 8076 1141, energycs@opisnet.com, or visit try.opisnet.com/ACAPMA to request a free 8-week trial subscription to its newest publication, OPIS Australian Oil Market Price Report.
