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

Dominic Giannini 29 April 2020 47
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.


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47 Responses to Cheaper fuel prices by the end of the week, Barr issues ultimatum
Michael Moxon Michael Moxon 6:23 pm 03 May 20

It's been so long since I've been to a service station I've forgotten what one looks like the car has hardly moved in weeks

Capital Retro Capital Retro 9:32 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?

grim123 grim123 3:17 pm 01 May 20

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.

Zakzook Chico Zakzook Chico 1:47 pm 01 May 20

Not only the fuel is expensive in Canberra. We are paying through the nose to see specialists as well! The cost of living in Canberra is too high!

Capital Retro Capital Retro 8:06 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?

    JC JC 6:01 pm 01 May 20

    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 Retro Capital Retro 7:34 pm 03 May 20

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

Colin Vivian Colin Vivian 6:36 pm 30 Apr 20

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

Daniel Duncan Daniel Duncan 2:14 pm 30 Apr 20

Still not going to vote for you Barr

Capital Retro Capital Retro 7:20 am 30 Apr 20

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

    JC JC 12:05 pm 30 Apr 20

    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.

Rob Thomas Rob Thomas 6:53 am 30 Apr 20

I blame the tram

    Rob Thomas Rob Thomas 5:25 pm 30 Apr 20

    so you're pro-tram are you??

    Ashley Wright Ashley Wright 5:28 pm 30 Apr 20

    Daniel Duncan why not. It has been blamed for so many things, so may as well be high fuel prices too.

    Rob Thomas Rob Thomas 5:29 pm 30 Apr 20

    Ashley Wright too rite!

    Daniel Duncan Daniel Duncan 5:32 pm 30 Apr 20

    Rob yes and no. I like the tram but I think it should have been a subway. Yes I know it would have cost more by a ton. I still don't see how the tram has fuel at about 20-30c more than Sydney.

Acton Acton 6:50 am 30 Apr 20

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.

    JC JC 12:06 pm 30 Apr 20

    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 Retro Capital Retro 2:19 pm 30 Apr 20

    It was certainly better before self-government.

    JC JC 5:44 pm 30 Apr 20

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

Jim Hosie Jim Hosie 12:07 am 30 Apr 20

Great whilst you’re at it Mr Barr how about cheaper rates...

    Dana Pordel Dana Pordel 2:53 pm 01 May 20

    Jim Hosie he has increased the rate 8-13 % just last year alone.

Dicko Thomas Dicko Thomas 11:12 pm 29 Apr 20

I'm too lazy to drive to the retailer offering the better price and reward them with my business. Wouldn't it be great if the government just passed some rules so I can just keep being lazy and a bad consumer.

    Ashley Wright Ashley Wright 5:28 pm 30 Apr 20

    Dicko Thomas and then complain there needs to be a government price watch site, when there are already several free ones that provide this information.

Jack Palmer Jack Palmer 10:42 pm 29 Apr 20

I am preparing for a bunch of 99.9 cent fuel on Friday

Jen Wright Jen Wright 10:30 pm 29 Apr 20

Why wasn’t there any concern when the new petrol station servicing Molonglo was chosen? Why was it allowed to be the same brand as the closest one, which happens to be the most expensive in Canberra??

    Ashley Wright Ashley Wright 5:27 pm 30 Apr 20

    Jen Wright service stations these days are developed and owned by one company who then leases it to an operator. I know the Cotter Road service station is owned by a Sydney developer and leased to Caltex.

    When sold the government wouldn’t have known who the eventual operator would be, nor maybe would the developer.

    The new BP at Nichols is another example, with that one the site is owned and developed by the family who own Cusacs furniture and leased to BP who operate it. Cusacs have owned that land for some time now.

    And if you like 7Eleven are selling a lot of sites at the moment. You can buy that as an investment and then be their landlord for 20 years.

Brody Clifford Brody Clifford 9:35 pm 29 Apr 20

I know what out come ill be betting on.

Steven Lloyd Steven Lloyd 8:50 pm 29 Apr 20

End of the day if metro can give good prices then they all can we pay way to much here and time something is done about it

    Ashley Wright Ashley Wright 10:26 pm 29 Apr 20

    Steven Lloyd look closely at the price board in the article title picture. What do you notice about the price of 91 at all 3 servos? All the same including metro.

    Stations that have a very cheap E10 price sell at a loss or at cost because people see that headline price in articles like this and assume all the prices are cheap when they aren’t. So for the small amounts of E10 they sell they recover their loss through other products.

    That said even $1.11 for 91 is too much even at metro.

HiddenDragon HiddenDragon 7:21 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.

Gregg Heldon Gregg Heldon 6:56 pm 29 Apr 20

He's going to slap them on the back of the hand with a wet paper bag.

Peter Major Peter Major 6:44 pm 29 Apr 20

Has Barr lowered the exorbitant rates he charges servos in the ACT

    Justin Watson Justin Watson 6:48 pm 29 Apr 20

    You know we are taxed far less than NSW and Victoria per person according to the ABS. Rates are pretty exorbitant all over the country. Luckily we have the cheapest electricity though as well. Maybe you need to think why is the cost of everything going up so much ALL over Australia. Its easy to blame Barr, but he doesn't have the power or ability to make Australia expensive. Only the Federal government can do that.

    Mathew Ryan Mathew Ryan 9:33 pm 29 Apr 20

    Justin Watson pretty sure you're wrong here. Commercial rates in ACT increased byv25% last year alone. Where are you getting your data that has ACT commercial taxed less than Vic and nsw?

Carole Sheilds Carole Sheilds 6:40 pm 29 Apr 20

About time, petrol at Kambah - 97.9 at independent station 1.11 at Caltex!

    Ashley Wright Ashley Wright 12:11 pm 30 Apr 20

    Carole Sheilds so which one do you shop at?

    And just out of interest United isn’t really an independent. It is a company owned site.

    The only difference between United and Caltex is the size of the company. But companies like United like to be considered independent.

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