As WA emerges from the coronavirus lockdown, petrol prices are rising — and it makes sense to shop around.
There’s a big difference between the lowest and highest priced fuel in the metropolitan area — a difference which could add up to over a $1000 a year.
New player Costco is consistently cheaper upfront and is a regular in our cheapest fuel column each edition — but are the savings worth the $60 joining fee?
Absolutely, if you’re buying a Prada handbag, diamond ring or giant teddy bear.
But the outlet at Perth Airport also sells standard unleaded (ULP), 98 RON, plus brand diesel, so we’ve crunched the numbers to see how much you’d save compared to a mainstream servo.
Prices are from April this year, when Costco started reporting to FuelWatch.
As a member-based fuel retailer, Costco was initially exempt from reporting under the Petroleum Products Pricing Act 1983 (WA), which has since been changed.
We priced fuel on Tuesdays, currently the cheapest day, over 13 weeks from April 14-July 7.
During this period, which takes in some of the lowest prices Perth has seen for years because of COVID-19, the Costco ULP price ranged from 77.7-99.7¢ per litre. The 98 RON price ranged from 94.7-116.7¢.
Costco prices move in small increments and can remain unchanged for up to a week.
The ULP price at mainstream service stations was more variable over the same period, ranging from 78.9-145.9¢. The 98 RON price ranged from 96.9-168.9¢.
On July 7, the ULP price at mainstream servos ranged from 99.9-136¢ — a 36.1¢ difference — and the 98 RON price ranged from 117.9-149.9¢ — a 32¢ difference.
At Costco, ULP on July 7 was 99.7¢ and 98 RON was 116.7¢.
Buying 50 litres each Tuesday at Costco over the 13-week period would have cost $573.05 for ULP and $689.05 for 98 RON.
At a mainstream service station it would have cost $583.70 for ULP and $705.90 for 98 RON, based on the minimum fuel price. This does not include any 4¢/litre discount, which would give you a $2 saving on 50 litres, totalling $26 over 13 weeks.
Without the 4¢ discount, Costco ULP was $10.65 cheaper and 98 RON was $16.85 cheaper, adding up to savings of more than $550 a year.
With the discount, mainstream ULP worked out $15.35 cheaper than Costco and 98 RON was $9.15 cheaper — but this is only if you snagged the cheapest price on the day.
Ultimately, Costco is worth the joining fee if you live near the airport or use Tonkin Highway regularly.
Otherwise, it makes sense to monitor fuel prices to get the best deal without having to drive out of your way to take advantage of it.
What affects fuel prices?
The ACCC says a combination of factors affects fuel prices, which can go up and down in response to changes in international benchmark prices, the value of the Australian dollar relative to the US dollar, levels of competition in different areas and pricing decisions by wholesalers and retailers.
Tracked against the international benchmark, the cost of regular unleaded petrol — calculated on the 95 RON price — in Australia’s five biggest cities, including Perth, has been consistently higher from April 2 to July 2.
The ACCC says petrol retailers have increased profits in recent years and should, instead, pass on the full benefit of falling oil prices to motorists, acknowledging price cycles in Australian cities make it difficult to assess the exact flow-through of falls in international crude oil and refined petrol prices in the short term.
Edith Cowan University Associate Professor of law Prafula Pearce was pleased the ACCC was calling on fuel companies to pass on quickly the benefits to motorists.
“However, some audits should be done to check if this is really occurring,” she said.
Petrol prices tend to move up and down in cycles, which the ACCC says is the result of “deliberate pricing policies of petrol retailers” and “not directly related to changes in wholesale costs”.
The duration of price cycles varies. In Perth it’s seven days, but it ranges from 13-38 days in other capitals.
Perth’s weekly fuel cycle was consistent for about five years, with most metro outlets hiking their regular ULP prices every Tuesday about 20¢ a litre.
This changed in March, with FuelWatch reporting a “disruption” where some of Perth’s major fuel companies raised prices on different days of the week.
FuelWatch shows prices currently peak on Wednesday and decrease to a low on Tuesday, sometimes below the wholesale price.
FuelWatch co-ordinator Kyle Huynh explained the difference between the lowest and highest priced metro ULP, PULP (95 RON) and 98 RON was substantial.
“Most metro sites follow the price cycle, but some do not,” he said.
“Sites deplete their supplies at different rates and, thus, the quicker ones will get resupplied at newer wholesale prices, so higher fuel volume sellers and sites with higher non-fuel profits have the ability to offer lower fuel prices.”
Local levels of competition, such as micro markets within a suburb and immediate surrounding areas, could also be different across the metropolitan area.
“There is a pricing strategy employed by the major brands to have a number of sites across the metro sell well below the daily average,” Mr Huynh said.
“It is to promote brand loyalty and associate low prices with their brand.”
“We call it headliner sites as these cheap sites tend to get promoted by the media.”
He said fuel brands can set prices appropriate to their business needs, which may include setting the same price across the metro area, or a different price depending on localised factors such as competition.
Some fuel brands might have franchised outlets, which set their own price that is not regulated by head office.
Other retailers might price match the competition’s price movements, which is called parallel pricing and occurs in many, of not all, retail markets.
What fuels are people buying?
According to Australian petroleum statistics from the Department of Industry, Science, Energy and Resources, West Australians used more than 1816 billion litres of unleaded petrol in the 2018-19 financial year. This includes:
1363.8 billion litres of 91 RON.
212.3 million litres of 95 RON.
240.4 million litres of 98 RON.
Diesel accounted for 1115.4 billion litres in retail sales.