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.