Canberra’s inland setting means its residents are missing out on more than the benefits of living by the beach, according to fuel suppliers and retailers who have laid some of the blame for the capital’s high petrol prices on its location.
Canberra’s location is part of its problem with high fuel prices, according to retailers and suppliers.
Prices in the national capital have not fluctuated for months and were significantly higher during the Christmas and New Year period. While they were comparable to cities like Sydney, Melbourne and Brisbane this week, Canberrans usually miss out on the price drops that deliver savings for motorists in other cities.
Shell and Coles Express supplier Viva Energy, Caltex and the Australian Institute of Petroleum have given their views on the issue in newly published submissions to the ACT Legislative Assembly’s inquiry into fuel prices.
In its submission, Viva Energy said it supplied 15 Coles Express service stations in Canberra. The fuel for those outlets was stored at terminals in Sydney and Newcastle, then transported to the capital by bulk fuel tankers.
“There are generally higher costs associated with transporting bulk fuel to regional locations such as the ACT which are relatively far from our refinery and main coastal fuel storage terminals,” the submission said.
“For Viva Energy, delivery costs into the ACT from our Clyde terminal [in Sydney’s west] can be more than five times higher than to deliver into a typical Sydney metropolitan location.”
Caltex supplies fuel to 20 service stations in the ACT. Half of those are Caltex-branded, while Woolworths operate the other half and set prices at the pump.
It also described the distance from distribution terminals as a factor in driving Canberra’s petrol prices higher than those elsewhere.
“Specifically, when considering fuel operations within the ACT, there are traditionally higher costs of distribution given fuel must be delivered by tanker from the nearest distribution terminal, as opposed to locations which are closer to seaboard terminals, and centralised distribution terminals,” the Caltex submission said.
The Australian Institute of Petroleum, an industry association that represents BP, Caltex, Mobil and Viva Energy, said there was generally a lag of one to two weeks between changes in international fuel prices and changes in Australian wholesale prices.
The lag occurred whether prices were going up or down, and happened because companies used a rolling average of international prices as part of their pricing methodologies, according to the institute’s submission.
In 2015, the institute carried out a detailed analysis of 170 Australian locations that showed the lag between changes in terminal gate prices and changes at the pump was seven times longer in Canberra than in Sydney.
In Sydney, it took just three days on average for fuel retailers to pass on movements in terminal gate prices to motorists, but in Canberra the average was 21 days.
“This lag to Sydney retail prices was longer in Canberra than for most surrounding towns including Queanbeyan (19 days), Goulburn (15 days), Wagga Wagga (15 days), Bega (9 days), Temora (5 days) and Moruya (3 days),” the institute’s submission said.
“Only Woolgoolga (30 days), Parkes (22 days) and Port Macquarie (22 days) of the all the towns that were studied in NSW had a longer lag.”
Because lower volumes of petrol were sold in Canberra than the larger capital cities, the institute echoed the Australian Competition and Consumer Commission’s statement that the factors behind fuel prices in the ACT were more closely aligned with those in regional areas.
These included distance and location factors, lower convenience store sales and less competition.
The institute also said because lower volumes of fuel were sold in Canberra than other capital cities, fuel stocks needed to be replenished less often and fuel retailers may not necessarily need to buy petrol when terminal gate prices were low.
“Regional service stations typically see one tanker per two-three weeks versus one or more tankers per day at some major capital city sites,” the institute’s submission said.
“Thus, at any time, some regional sites might still be recovering the cost of fuel paid for weeks ago.”
The Legislative Assembly select committee investigating Canberra’s petrol prices will table its final report by June.
The Independent Competition and Regulatory Commission, which is conducting an analysis of the factors fuelling petrol prices in the ACT, procured $119,996 worth of consultancy work for the probe late last month.
Extracted from Canberra Times