Australian motorists are turning their backs on one of the cheapest fuel options, costing themselves hundreds of dollars a year, a peak motoring body has warned.
E10 accounted for just 19 per cent of retail petrol sales in NSW last year, despite the motoring body warning some drivers are paying up to 30 cents a litre extra for premium fuel with “no benefit”.
Now, as cost-of-living pressures continue to bite, the NRMA is questioning why the cheaper cost of ethanol used in E10 isn’t translating into even bigger savings for drivers.
The concerns come as the Independent Pricing and Regulatory Tribunal (IPART) launches a fresh review of the E10 market, including the factors that influence motorists when choosing which fuel to put in their cars.
NRMA spokesperson Peter Khoury told Yahoo News Australia many drivers could be spending more than they need to.
“We are absolutely concerned that a lot of Australians are buying 98, paying upwards of 30 cents a litre more and getting no benefit from doing so,” he said.
Mr Khoury said the NRMA had long encouraged motorists to consider E10 if their vehicle was compatible.
“The NRMA’s all about choice, and if your car can take it, we think that you should consider it as an option,” he said.
Drivers whose vehicles require higher-octane premium fuel should continue to follow their manufacturer’s advice.
“If you pop the fuel cap, it normally tells you there what kind of fuel you can take, and if it says you have to take premium, then obviously follow the manufacturer’s advice,” Khoury said.
“But most cars can take regular, which means that they can take E10.”
Why should E10 be cheaper?
E10 contains up to 10 per cent ethanol blended with petrol, but the NRMA argues the significantly cheaper price of that ethanol isn’t being fully reflected in what happens further up the fuel supply chain.
Khoury said wholesale prices for E10 and regular unleaded were currently “almost inseparable”, despite the ethanol component being considerably cheaper than petrol.
“That doesn’t make any sense to us, given that we know that the ethanol component, which is 10 per cent of that fuel, is so much cheaper than petrol,” he said.
The price of wholesale ethanol is regulated by IPART, with Khoury pointing to a current price ceiling of $1.58 a litre compared with regular unleaded wholesale prices above $2 a litre.
“That gap should represent an even cheaper wholesale price for E10 once it’s blended, but it’s not,” he said.
“And that’s, we hope, what IPART will get to the bottom of.”
IPART member Jonathan Coppel said the regulator’s preliminary findings showed E10 remained the lowest-priced option for consumers, but its cost of supply had increased relative to regular unleaded petrol.
“Our preliminary findings suggest that E10 continues to be the lowest-priced fuel option for consumers, however recent market data suggests that the cost of supplying E10 has increased relative to regular unleaded petrol,” he said.
“We are seeking feedback on the reasons for these trends, including the factors that influence consumer demand for E10, and the commercial and operational considerations involved in producing, wholesaling and retailing it.”
How much could switching to E10 save?
The difference at the bowser can add up for motorists who fill their cars with premium petrol despite their vehicle not requiring it.
Research from Compare the Market earlier this year found a motorist with a compatible vehicle switching from 98 to E10 equated to around $12 savings on a 50-litre tank — or $624 over a year if filling up once a week.
The same research found 73 per cent of Australians surveyed felt financially stressed by fuel costs, yet 46 per cent weren’t planning to change from their usual petrol to save money.
Khoury said making E10 more competitive could provide further relief for households struggling with everyday expenses.
“We want people to be able to access cheaper E10 because it can provide cost-of-living relief to families who are struggling to pay the bills, and we know petrol is a big component of that,” he said.
There could also be a broader benefit for Australia’s fuel security.
Unlike Australia’s heavy reliance on imported oil, the ethanol blended into E10 is produced domestically, including in regional Australia.
“The more ethanol and the more biodiesel we use in Australia — it’s all produced domestically — the less reliant we are on imported oil,” Khoury said.
Extracted in full from: https://au.news.yahoo.com/aussie-drivers-urged-to-make-petrol-station-switch-to-save-624-amid-cost-of-living-struggle-020723457.html
