29 April 2020

Cheaper fuel prices by the end of the week, Barr issues ultimatum

| Dominic Giannini
Join the conversation
45
Act petrol prices 29 April 2020

One of these things is not like the other … petrol prices in the ACT today. Andrew Barr has sought to attract more independent fuel retailers to the ACT to increase competition. Photos: Michelle Kroll.

Petrol companies have until the end of the week to pass on lower fuel prices to ACT consumers or Chief Minister Andrew Barr will use price control powers to set a maximum retail margin in the ACT.

Companies that defy the order could face $40,000 fines and/or six months’ jail per offence.

Mr Barr said the continually exorbitant petrol prices in the ACT were clear market failures so he has written to half a dozen independent fuel retailers asking them to open in Canberra in an attempt to increase competition in the Territory.

“It is a market failure that demands government intervention,” Mr Barr said on ABC Radio this morning (Wednesday, 29 April).

“There is an element of truth in more competition leading to lower prices – an economic philosophy I believe in.”

Although Mr Barr flagged that the legislation would only be used as a last resort, the continual indifference and dismissing replies to the letters he sent to large petrol retailers a fortnight ago led him to issue the ultimatum this week.

The ACT Legislative Assembly’s inquiry into fuel prices heard from the Australasian Convenience and Petroleum Marketers Association (ACAPMA) that it was more expensive to conduct business in the ACT.

ACAPMA said that fuel distribution costs in the Canberra market were almost double the costs in larger capital cities and that lease costs in Canberra are substantially higher than the NSW average.

While Mr Barr conceded that there were extra costs associated with selling and distributing fuel in the ACT, he flagged that these costs should only translate to around six to seven cents a litre whereas the difference between Sydney and Canberra prices was often more than 20 cents a litre.

A handful of large petrol retailers control 70 per cent of the market in Canberra, leading to a lack of competition that was influencing price gouging, Mr Barr said.

A fuel price watchdog, attracting more independent operators and a potential expansion of the FuelCheck price monitoring scheme from NSW were part of a suite of measures announced by the ACT Government back in February.

The government says it will establish an oversight body to monitor the ACT fuel market, encouraged by the fact prices went down during last year’s two inquiries.

The government will also conduct an education program so drivers can understand how they can influence competition by shopping around for the best price.

Join the conversation

45
All Comments
  • All Comments
  • Website Comments
Latest
Capital Retro9:32 pm 01 May 20

One day to go.

If the prices don’t come down and we see the lights on at the Chief Minister’s office on Sunday night does this mean the writs will be served on Monday morning?

I consistently buy fuel for considerably less in country towns that are way further from fuel depots than Canberra. The “transport costs” argument is nonsense.

Capital Retro8:06 am 01 May 20

“Costco sells at their cost + margin. If they can sell U91 for 88.7c why can’t Woollies & Coles?”

They are located where rates and land tax do not apply?

Why target just woolies and Coles? Is that because they like Costco are Supermarkets?

If so please keep up neither supermarket has anything to do with fuel these days. Woolies sold their service stations a year ago and at Coles servos the price is set by Viva (essentially an arm of Shell) who own the petrol stations. Coles just runs the shopfronts and collects fuel payment (for a fixed fee) on behalf of Viva.

As for your question there are some major differences between Costco and all the other service stations brands other than your inference that high rates is the issue.

Those differences are: Costco is more than happy with a smaller profit margin as they make their profits off their stores and memberships in particular. Secondly they have far less staffing costs, no cash handling costs and not having an attached shopfront they don’t have the expenses of building, running and maintaining the shop.

There is another servo that meets many of the same features which is metro at Fyshwick but they of course pay ACT rates so kinda blows your theory.

Oh and so you know the Airport who pays ACT rates and presumably passes these into their tenants like Costco. They are exempt from planning control though.

Capital Retro7:34 pm 03 May 20

How do their rates and land taxes compare to the rest of Canberra then?

Capital Retro7:20 am 30 Apr 20

I think the prices are similar in Queanbeyan, NSW so it’s a regional thing, not just Canberra.

They are. People will look at one cheaper servo and say look QBN prices are cheaper. Or they quote the price at the cheap place at Mogo and say the coast is cheap.

But when you look at any of the apps that are around you can see that the price here is much the same as the rest of NSW once you get out of Sydney/Newcastle and the Gong.

With out doubt we are paying too much but it isn’t just a Canberra thing.

ACT rates have been going up 10-11% every year. These increases exceed all other increases. Money spent on rates is now higher than money spent on petrol. Barr is simply trying to divert attention from his out of control budget and ever rising rates.

Rates here have gone up and by a lot but still a lot better or on par with many other councils. What it shows is what many outside of Canberra have said for years which is we have had it too good.

Capital Retro2:19 pm 30 Apr 20

It was certainly better before self-government.

Not going to disagree on that. But so easy when the feds were paying.

HiddenDragon7:21 pm 29 Apr 20

When this one is sorted out, the ACT Government can move on to all the other goods and services which cost more here because they are being sold into a relatively small, geographically dispersed, well-heeled captive market.

They should also dust off and face up to the various reports (Productivity Commission etc.) which have shown that the costs of delivering state and local government services in Canberra are amongst the highest in the nation. Many Canberra households were struggling to meet those costs before the virus hit – many more will now be dealing with that grim reality.

Daily Digest

Want the best Canberra news delivered daily? Every day we package the most popular Riotact stories and send them straight to your inbox. Sign-up now for trusted local news that will never be behind a paywall.

By submitting your email address you are agreeing to Region Group's terms and conditions and privacy policy.