Petrol prices higher because Canberrans won’t shop around: servo group
By Sourced Externally
March 20, 2019
Canberra’s petrol prices are higher in part because the city’s “affluent” population is not as sensitive to price signals as other jurisdictions, an ACT parliamentary inquiry has heard.
Australasian Convenience and Petroleum Marketers Association chief executive Mark McKenzie told the committee investigating Canberra’s consistently high fuel prices those who did not want to pay them were already seeking out discount retailers.
However his group’s analysis has shown most motorists in Canberra continued to patronise their local service stations, a finding consistent with other wealthy markets where customers opt for time-poor, cash-rich purchase behaviours and local businesses respond accordingly.
“Don’t take it as I say that we look at the ABS data and Canberra as the highest household income there and therefore we say ‘let’s put the price up to that level’,” Mr McKenzie said.
“If you’ve got a community that is very much at the lower socioeconomic end they’re highly sensitive to fuel price, so if I’m two cents a litre higher than my competitor, they’re not going to reward me, they’re going to go to the discounter, but if I’ve got a very affluent community they’re less sensitive to fuel prices.”
Mr McKenzie said he saw “70 vehicles” on the forecourt of Costco on Sunday which indicated people were seeking out the lower prices – “You don’t see that anywhere else in the country,” he remarked – but he also saw drivers lined up for petrol at the BP on Melrose Drive, which was at the higher end of the price scale.
“There’s nothing in it for me as that service station to drop to match Costco because my local market is just shopping in that area, they’re not making the it out to the airport,” Mr McKenzie said.
Mr McKenzie said the savings people get from shopping around were not enough to make the average Canberra driver consider going out of their way for fuel.
“The average fill at a petrol station is 50 litres. Five cents variance is $2.50. It’s half a cup of coffee. For an affluent person, that’s not enough to get them to travel halfway across the city because time is a valued commodity,” Mr McKenzie said.
Mr McKenzie also said fuel watch scheme would have a “nil” effect in the capital as there were no price cycles.
“Real time reporting works where you have that volatility in prices. In Canberra’s area … if you look at … the last four weeks just gone the average was 142, 142, and 142.4 [cents] where as if I look at Brisbane over the same time 142, 130, 152 so the value of real time fuel price reporting would work better in that market than it does in Canberra,” Mr McKenzie said.
He said while the NSW price watch website had two million visitors in its first year of operation, there were 148 million fills in that period which suggested the scheme was not being utilised well.
“In the ACT if you’ve got a problem with market structure, it’s not going to address prices, it will just make it more visible,” Mr McKenzie said.
However the ACT Council of Social Services told the inquiry Canberra’s high fuel prices were hitting low income households the hardest and every little bit helped.
Director Susan Helyar said fuel prices rose by 15 per cent in Canberra over the past year and by 29 per cent over the past decade – higher than in any other Australian capital city.
“At the same time low-income households have been put under more and more pressure as essential costs of living have increased while their income has stayed the same,”she said.