A global crude oil surplus and COVID-19 restrictions on travel and economic activity led to the lowest monthly average petrol prices on record during April 2020 in Australia’s five largest cities.
The ACCC’s latest petrol monitoring report showed the monthly average retail price for petrol was 102.6 cents per litre (cpl) in Sydney, Melbourne, Brisbane, Adelaide and Perth. This is the lowest inflation-adjusted monthly price recorded since comprehensive retail prices began being collected in May 1991.
On 23 April, seven-day rolling average prices fell below one dollar per litre for the first time since March 2005 and hit a low of 92.4 cpl six days later. Prices then increased to 108.4 cpl by the end of May following increases in international crude oil and refined petrol prices.
“The sharp fall in petrol prices in the first few months of the year was good news for most Australian motorists,” ACCC Chair Rod Sims said.
Significant reductions in crude oil prices were influenced by news coming out of China about the COVID-19 outbreak. This was compounded in early March by the breakdown of the agreement to cut crude oil production by the OPEC cartel and other producers, including Russia.
Changes in international refined petrol prices usually take a couple of weeks to be reflected in retail petrol prices in the larger capital cities, and longer in the smaller capital cities and in regional locations.
Due to a substantial reduction in demand for petrol in Australia associated with COVID-19 restrictions, it took longer than normal for prices to come down because it took retailers longer to turn over existing volume bought at a higher price.
In April, petrol sales volumes across Australia were 43 per cent lower compared with monthly average sales in calendar year 2019.
Between January and the end of May 2020, weekly average retail petrol prices decreased by at least 40 cpl in almost half of the regional locations covered during this period of increased ACCC fuel monitoring.
However, prices in some regional locations were slower to fall and remained high in a number of towns.
“Average prices in Cloncurry, Mount Isa, Emerald, Cunnamulla and Forbes only fell by around 20 cpl or less between January and May and have not changed much since then,” Mr Sims said.
“Retailers should share the savings from lower global oil prices with drivers. Excessive pricing which harms local communities, while not illegal, has been called out by the ACCC and community leaders.”
In the March quarter, average petrol prices across the five largest cities were 137.8 cpl, a decrease of 11.3 cpl from December 2019.
Petrol prices in Brisbane remained the highest of the five major capitals at 140.7 cpl, 3.7 cpl higher than the average of the other four largest cities.
Darwin continued to have relatively low petrol prices in the March quarter at 136.1 cpl, 1.7 cpl lower than the average in the five largest cities. This was the fifth consecutive quarter in which petrol prices in Darwin were lower than Australia’s five largest cities.
The city-country price differential increased significantly in the March quarter, with the average price in regional areas 6.7 cpl higher than the average price across the five major capitals.
The ACCC monitors fuel prices in over 190 regional locations in Australia and in the March quarter the average petrol price was 144.5 cpl.
“We understand that consumers in regional areas are rightly upset at paying more than their metro counterparts. The lack of vigorous and effective competition is one of the major reasons people living in regional Australia pay more for petrol,” Mr Sims said.
“Where there is competition, you tend to see lower prices. Giving your business to service stations with cheaper prices sends a strong message to those charging more that they will lose your business.”
Seven-day rolling average retail petrol prices in the five largest cities: 1 April 2019 to 31 May 2020
Source: ACCC calculations based on FUELtrac data.
Notes on the chart
A seven-day rolling average price is the average of the current day’s price and prices on the six previous days.
The area between the two dotted lines represents the March quarter 2020.
The shaded area represents the period after the March quarter 2020.
On 16 December 2019, the Treasurer issued a new Direction to the ACCC to monitor the prices, costs and profits relating to the supply of petroleum products in the petroleum industry in Australia and produce a report every quarter.Release number: 136/20ACCC Infocentre: