A quick glance at the petrol price cycle information presented on the ACCC’s website (see https://www.accc.gov.au/consumers/petrol-diesel-lpg/petrol-price-cycles#petrol-prices-in-melbourne ) suggests that average petrol prices in Adelaide, Brisbane and Melbourne are likely to turn up shortly as part of the normal operation of the petrol price cycle in each of these cities – with Sydney being the exception as a result of its’ cycle having changed two weeks ago.
Unfortunately, the price cycle changes in these three capital cities appear likely to occur in the week before the 2018 Easter Holiday Break.
And we all know what that means….
Yet again, as service station owners and their employees give up holiday time with their families to ensure that Australian motorists have ready access to fuel during their Easter Holiday break, our industry will likely cop a wave of criticism alleging holiday period petrol price gouging.
While we could respond by saying that the timing of these petrol price cycles could have been readily predicted months ago by simply applying the average capital city cycle durations to the date of the last price peak in each of these cities (as posted for all to see on the ACCC website), such a rational argument will be largely ignored in favour of the more sensationalist allegation about holiday period price ‘gouging’ by fuel retailers.
It is ironic that much of this criticism will come from motoring bodies like the RACQ who seem to have no problem running an accommodation service that freely connects their members to hotels and holiday resorts that advertise and charge substantially higher rates during public holiday periods.
The hypocrisy is breathtaking.
But let’s just skip over the fact that hotel operators, airlines and cafes all seem to lift their rates during holiday periods and look at what happened to petrol prices during the tail of these latest price cycles.
Given the RACQ’s keen interest in Brisbane’s petrol prices of late, let’s focus on Brisbane’s average petrol prices during the past week.
A quick examination of the petrol price information published by the Australian Institute of Petroleum (AIP) for the week ending 18 March 2018 (see https://aip.com.au/sites/default/files/download-files/2018-03/Weekly%20Petrol%20Prices%20Report%20-%2018%20March%202018.pdf) tells us that the average terminal gate price in Brisbane (note this is not the true wholesale price delivered to forecourt but we will work with it for arguments sake) was 122.8 cents per litre (cpl).
When this fuel cost is added to the average weekly retail cost (i.e. rent, wages, electricity, security etc) for a ‘typical’ metropolitan service station of 10cpl, the break-even cost of selling fuel in Brisbane was 132.8cpl. (Note the average cost was derived from evidence provided by ACAPMA to a Victorian Parliamentary Fuel price inquiry see: https://www.parliament.vic.gov.au/images/stories/committees/eejsc/Fuel_Prices_in_Regional_VIC/Submission_32_-_ACAPMA_22092017.pdf)
Comparing this break-even sale cost of 132.8cpl for Brisbane servos with the average Brisbane petrol price of 127.2cpl during the past week (again using data from the AIP weekly pricing report), we can see that Brisbane fuel retail businesses lost 5.6cpl during the past week as shown in the table below.
Further, the mismatch in the timing of the Brisbane cycle with the Sydney cycle means that average Brisbane petrol prices were 8cpl cheaper than average Sydney prices.
So, let’s take stock for a moment. During the week ending 18 March 2018, Brisbane motorists:
- Paid 5.6cpl lower than what it actually cost to get petrol to their car’s petrol tank
- Paid an average 8cpl lower for their petrol than Sydney motorists
Now if we used the same approach as apparently used by the RACQ, we could extrapolate the findings of this one-week snapshot to draw the following conclusions about Brisbane petrol prices:
- Brisbane motorists pay an estimated $145.60 per year lower than what it costs to actually make fuel available to them.
- Brisbane motorists pay $200 less per year than Sydney motorists for their fuel and, if we use some of the base data from the ACCC Brisbane petrol study on annual volumes, we can estimate that Brisbane motorists pay $121M less than Sydney motorists for their petrol
Extrapolating the one-week findings as we have done above is, of course, nonsense. But it does demonstrate a point about some of the apparent games being played by organisations like the RACQ in respect of the select use of petrol price data.
It is interesting to note, for example, that the RACQ has made no media mention during the past week about Brisbane petrol prices being lower than Sydney for the past 12 days.
No congratulatory message to the industry. Nothing.
Nor have they commented on the fact that fuel has been retailed below cost across much of Brisbane over the past week.
But, you can bet on the fact that they will likely cry foul next week as the fully predictable petrol price cycle starts to impact on petrol prices in the lead-up to Easter.
Why would you ever let the facts get in the way of a good story?
