Friday the 26th of October and Saturday the 27th of October 2018 marked the conduct of a two-day national boycott of service stations across Australia, as widely promoted on social media.
The boycott, initiated by a Bundaberg woman in Queensland, was picked up by national media outlets in the weeks leading up the event and resulted in 80,000 people signing up to the action (a further 70,000 people indicated that they were ‘interested’ in participating).
Reports received by ACAPMA from fuel retail businesses – both large and small – indicated that the boycott had no detectable impact on either fuel volumes or convenience store sales (on either the two protest days or the days leading into and following these days).
“In short, service station operators reported ‘business-as-usual’ operation throughout the boycott period”, said ACAPMA CEO Mark Mckenzie
“The clear majority of motorists either ignored or were unaware of the protest and continued to fill their cars as normal”, said Mark
“But it would be wrong to conclude that the community does not continue to be concerned about petrol prices”, added Mark
The combined effect of a 44% increase in the international price of crude oil and a 10% devaluation in the Australian dollar over the past 12 months, has seen a 26cpl increase in the international price of petrol purchased through the Singapore hub – with a flow on effect to prices paid by Australian motorists at the pump.
“Punishing Australian fuel retail businesses for the market decisions of oil producing countries and international exchange rates made no sense whatsoever and so our hope is that most motorists recognised this fact and acted accordingly”, said Mark
“But the more likely explanation is that people just needed fuel and simply chose to fill up as normal”, continued Mark
The FaceBook protest and the media surrounding it has, however, attracted the attention of Federal politicians with a number of MP’s calling for this issue to be addressed over the past week.
These calls have included calls for reductions in Federal Fuel excise, calls for the ACCC to take tougher action on the fuel industry and even suggestions that the Coalition Government could consider actions such as compulsory divestiture of assets by fuel businesses.
While the political reaction is somewhat understandable, most of these suggestions are poorly conceived and resulted in one case, with a NSW Federal politician being forced into an embarrassing backdown on his suggestion for reduced fuel excise during an interview on Melbourne talkback radio earlier this week (see https://www.3aw.com.au/youve-wimped-it-neil-mitchell-grills-liberal-mp-over-petrol-prices/)
Calls for divestiture of assets is equally misinformed as evidenced by a simple reading of the ACCC’s latest report on the retail and wholesale market shares in Australia (see https://www.accc.gov.au/publications/petrol-industry-reports/retail-wholesale-petrol-market-shares-in-australia)
The ACCC’s September 2018 Report into the Australian petrol market shows that independent chains have significantly increased their market shares over the last 10 years, at the cost of market share reductions for both the supermarkets and oil majors.
In fact, the ACCC report shows that the share of petrol sold by independent chains has increased from a low of 6% of all sales in 2002/03 to 25% of all sales in 2016/17.
It is worthwhile noting that much of this increase followed the ACCC’s action on high value shopper dockets, resulting in the supermarket retailers entering into voluntary undertakings to stop using this marketing mechanism.
“While community concern over petrol prices is perfectly understandable, the most disappointing aspect of this most recent debate – and in fact all recent debates about petrol pricing – is the lack of basic knowledge about the factors that contribute to retail prices in Australia despite the extensive information that is available”, said Mark
The ACCC, for instance, produces regular and comprehensive quarterly reports about the petrol market in Australia (together with a series of special industry reports as directed by the Australian Government).
“In all the ACCC has produced more than 35 comprehensive reports about petrol prices in Australia since 2008, with these reports being readily accessed via the Commission’s website’, said Mark
“The problem is that no one other than the ACCC and the fuel industry is actually reading these reports”, said Mark
In addition, the Australian Institute of Petroleum (AIP) produces a regular comprehensive weekly report into Australian Petrol and Diesel prices.
These reports are also freely available to all via the AIP website (https://www.aip.com.au/pricing/weekly-prices-reports) and provide a detailed breakdown (and trends) of the key components of fuel prices in Australia.
“Once again, although the industry is investing significant time and energy in producing these reports, no one is reading them”, said Mark
While the lack of knowledge has only created discomfort in the ‘cheap shot’ petrol price debates of recent years, the engagement of Federal Politicians flagging policies that risk significant value destruction (and/or actually increasing average fuel prices in the future) means that we must actively encourage our policymakers to look at the facts before making any new policy decisions.
“Our industry is not afraid of having a meaningful debate about petrol prices, petrol taxes and associated policies – nor have we ever been in the past”, said Mark
“What we are afraid of is ill-informed, knee-jerk policy decisions that risk destruction of the economic value of this major Australian industry – potentially putting at risk the livelihood of the 76,000 Australians that work within it”, concluded Mark
Perhaps all of us might take a lead from a conversation that Rod Sims (ACCC Chairman) had on ABC Radio yesterday, where he demonstrated the value of informed commentary on petrol prices in Australia (https://www.abc.net.au/radionational/programs/breakfast/accc-says-international-oil-prices-to-blame/10450258)