31 October 2018

Could we cut Canberra's exorbitant fuel prices?

| Genevieve Jacobs
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Petrol prices, dispensers with USD dollar symbol angle view

Fuel prices in rural NSW are consistently lower than in Canberra.

While petrol prices in Australia are at their highest in a decade and the Federal government demands action, here’s a safe bet: fuel will still cost more in Canberra than anywhere else in the region.

Peter Khoury from the NSW/ACT NRMA branches has a long list of places ranging from Bateman’s Bay ($1.57 per litre) to Cootamundra ($1.52) and Leeton ($1.55), linked by nothing much other than being cheaper than average Canberra fuel prices of $1.64 per litre. Yes, it costs 12 cents per litre less to fill up in Cootamundra than in Canberra.

So as Prime Minister Scott Morrison presses the Australian Competition and Consumer Commission to do something about getting motorists a better deal at the fuel pump, could we also take action on Canberra’s notoriously sky-high prices?

“Overwhelmingly, the factors pushing those international oil prices up are beyond the Australian government’s ability to control,” Peter Khoury says. “The geopolitical unrest among oil producers causes prices to be high at a time when the Aussie dollar is weaker by 11 cents than last year. That alone adds nine cents at the bowser.

“But in relation to Canberra, you’re correct that fuel prices are consistently higher than NSW because of the genuine lack of competition. Canberra prices are well ahead of smaller regional towns like Albury, Bathurst, the Central Coast. I could go on and on, but it is a consistent pattern.”

Khoury suggests that the ACT government could adopt the same petrol reforms as NSW did in 2016, where every service station must now post their fuel prices in real time. That information is then available to members of the public through the FuelCheck portal and an app developed by the NRMA. He says the NRMA has been lobbying the ACT government to implement the same scheme but hasn’t made much progress.

“That process gives members the information they needed to find bargains. I admit that there are not many bargains to be had in Canberra, but what we saw happening in Sydney and around NSW was that it increased both competition and transparency. The gap between wholesale and retail has closed by two cents per litre by comparison with the other capital cities.”

Khoury says that in the Australian fuel market generally, the profit margin of 16 cents per litre is sitting at four cents higher than it was last year. And while oil prices have been falling internationally in the last week or two, Australian providers are slow to pass the benefits on to consumers.

“If the ACCC were to do anything, it would be to look at the profit margins of the more expensive service stations and put pressure on the oil companies to rein the margins in. I know that four cents is not a huge amount when the average price in Canberra is $1.64, but it helps.”

“The second thing is making sure the oil price falls are passed on to the consumers in a timely fashion. I don’t know whether it’s simply gouging or not, but in places where there are fuel price cycles, the prices jump in an afternoon by as much as 20c to 30c per week, but when it falls, it takes weeks.”

But given all that, Khoury says that global factors will always play the biggest role in the price wars. “On November 5, there’s a new round of sanctions against Iran being announced. If the world reacts to the Saudi journalists’ murder with global sanctions, then all of that can have a dramatic impact on world oil prices.”

And not even the Prime Minister can do anything about that.

Why do you think that fuel prices are so high in Canberra? What would help the burden on our wallets?

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There’s no question in my mind that the two big supermarkets’ petrol outlets — Coles/Shell and Woolworths/Caltex — are colluding to keep petrol prices high in Canberra. Certainly neither one ever attempts to undercut the other on price, so there’s no competition and the prices at each are identical. You can be sure that neither chain sells at a loss when issuing shopping dockets or discount cards for petrol purchases, therefore those discount prices could be the standard price and the companies would still make a profit — just not as big a one.

As Rod Phillips says, people still queue for Coles/Woolworths petrol in Wanniassa even now that the Kambah United has opened. I suspect it’s because there’s been so little competition here for so long and that they’ve used those same outlets for so long, that they go on doing so just from force of habit.

I myself drive a mile further each way to buy petrol from Kambah United, and I’d do so even if their prices were no cheaper, just to take custom away from the price-gouging supermarkets.

I’d like to see the ACCC investigate resale petrol-price maintenance in Canberra, but I suppose they’d consider us too small a market to bother about…

Perhaps, but we have *so many* petrol stations in Canberra that aren’t held by the big two. There are BPs and 7-Elevens scattered across the city. I’m not disputing collusion, but I don’t think it’s necessarily just the Colesworth duopoly is to blame.

Personally, I drive my car until the light comes on and then go to the next available station. Interestingly, it’s usually BP.

If you are an NRMA member you can get 5c/litre off the price of any fuel at participating Caltex service stations. Have to do it via the NRMA phone app. Not all Caltex ones are the cheapest around but I have found the one at the Airport the best.

Queanbeyanite7:53 pm 01 Nov 18

Yes, cut excessive commonwealth spending, reduce the $600 billion Cwealth debt to boost the Australian dollar, voila! cheaper petrol.

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