This week saw the leader of the Liberal opposition in the Australian Capital Territory call for the introduction of new fuel price reporting laws, boldly stating that such laws would lower average petrol prices in Canberra.
The exact nature of the proposal was a little confusing given that it appeared to have been developed from a combination of some elements of the real-time fuel price reporting laws operating in some Australian jurisdictions (i.e. NSW, QLD and the Northern Territory) and the very different price regulation laws that operate in Western Australia (i.e. FuelWatch).
Nonetheless, one of the most concerning elements of the 22nd of January 2019 announcement by the ACT Opposition Leader was the headline, namely: “Liberals will bring down cost of petrol with real-time fuel watch”
Another was the claim that Canberra was ‘the most expensive place to buy petrol in the country’ which would likely come as a surprise to those living in Hobart and a large number of areas in country and regional Australia.
There is no doubt, in terms of Australia’s eight capital cities, Canberra is among the most expensive just marginally behind Hobart and Darwin in most instances.
“But to suggest that this issue can be addressed by introducing fuel price reporting is wholly inconsistent with the experiences of three Australian jurisdictions that have introduced real-time fuel price reporting in recent years”, said ACAPMA CEO Mark McKenzie
Canberra’s average fuel prices, like Hobart and many of the regional areas investigated by the ACCC in recent years, track higher than other cities due to the relatively small size of the market and the structure and intensity of local market competition.
“Introducing real-time fuel price reporting laws cannot be expected to address these market characteristics – they simply make prices available to consumers in real-time so that they can make a choice to purchase the cheapest fuel in their market should they choose to do so”, said Mark.
Work completed by the Griffith University on behalf of the Queensland Government – prior to the launch of the Queensland fuel price reporting laws in December last year – revealed that the operation of fuel price reporting laws in both NSW and QLD had a negligible impact on petrol prices (that is +/- 0.2cpl) following the introduction of fuel price reporting laws.
While claims to the contrary have been made by NRMA and others, these statements have not been supported by any objective analysis of available data (and nor have these organisations published such analysis for peer review).
The 2018 Queensland study follows a previous study completed by the Organisation for Economic Co-operation and Development (OECD). This study (see https://one.oecd.org/document/DAF/COMP/WD(2017)25/en/pdf) examined the implementation of compulsory fuel price reporting laws around the world, including the West Australian Fuel Watch Regulation.
The 2017 OECD study concluded that compulsory fuel price reporting laws do not deliver any discernible consumer benefit and that, in some cases, contributed to reduced industry competition and/or small but significant increases in average fuel prices for motorists.
The other justification used by the ACT Opposition Leader was that an assessment of work completed by the ACCC into the operation of the WA Fuel Watch had revealed that WA motorists saved up to $520/year as a result of the operation of the scheme (This scheme, the only one of its type in Australia, requires fuel retailers to advise what their fuel prices will be a day in advance, then publishes these prices on a government website and prohibits fuel retailers from changing prices over the ensuing 24 hour period).
It is worth noting what the actual findings of the ACCC’s investigation of WA’s Fuel Watch Regulation
Specifically, the ACCC found that the WA Fuel Watch Regulation appeared to have changed the discount price cycle and could save motorists $520/year (or $10 per week) if they always bought fuel on a Monday – the cheapest day of the cycle (see https://www.canberratimes.com.au/national/act/wa-fuel-scheme-co-ordinator-open-to-discussion-with-act-government-20190108-p50q72.html)