The ACCC has released its Quarterly Report on the petroleum market for the December 2021 quarter and has taken the opportunity to explore both the report findings and the current fuel price situation, noting that international factors, including COVID and the Russian invasion of Ukraine have pushed February prices to an eight year high.

In releasing the December Quarterly Report ACCC Chair Rod Sims noted; “It is tempting to point the finger at petrol retailers when prices are very high, but our data shows that late last year 86 cents of every dollar spent by consumers at the bowser was outside of the retailers’ control”.

The three primary elements of the price of fuel at the bowser are; Mogas 95 (the benchmark price of refined petrol in the Asia-Pacific region), taxes (excise and GST), and other costs and margins at the wholesale and retail levels.  This last element includes all of the operating costs for the fuel transport and fuel retail businesses including; staff, equipment, insurance, business taxes, electricity and compliance, as well as wat the ACCC has found to be very modest profits.

While committing to “continue to closely monitor the movements in local retail prices to see if they reflect international prices” the ACCC made a point of noting that during the December quarter, Mogas 95 and taxes together accounted for 86 per cent of the average price of petrol and that the 10.3 cpl jump in average retail petrol between the September and December quarters 2021 was primarily driven by higher priced Mogas 95.

The Russian war in Ukraine is also acknowledged as playing a part in the pricing situation today.  “The world was already experiencing high crude oil prices late last year due to the continuing actions of the OPEC and Russia cartel, and the enduring Northern Hemisphere energy crisis. The shocking events in Ukraine have forced crude oil prices even higher, as Russia is a major supplier of oil,” Mr Sims said.

“Retail petrol prices in Australia are largely determined by international refined petrol prices and the Australian/US dollar exchange rate. As refined petrol is made from crude oil, movements in the global crude oil price drive the international price of refined petrol.”

“Crude oil prices have been climbing sharply since late-2020 and prices at the bowser here have followed,” Mr Sims said.

The last time prices in Australia were as high as they were in late-February was in January 2014, when strong international demand, conflicts in the Middle East and Ukraine, and a lower AUD/USD exchange rate pushed real daily average petrol prices to 182.7 cpl.

In June 2008, in the period before the Global Financial Crisis, daily average prices reached a record high equivalent to 212.9 cpl in today’s dollars.

Retail sales of fuel have mirrored other retail areas, rebounding strongly with fuel volumes 4% higher than in 2020.  This pleasing trend is still significantly below, 11% below, pre pandemic levels from 2019

A copy of the ACCC Quarterly Report for December 2021 can be found here;  https://www.accc.gov.au/publications/quarterly-reports-on-the-australian-petroleum-industry/quarterly-report-on-the-australian-petroleum-market-december-quarter-2021

For more industry context see the Australian Fuel Industry Quarterly Update, an industry led report that adds further context to the ACCC report – https://acapmag.com.au/2022/03/regional-versus-metro-petrol-prices/

Elisha Radwanowski BCom(HRM&IR)
ACAPMA

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