Could we cut Canberra’s exorbitant fuel prices?

Genevieve Jacobs 31 October 2018 23
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?

What's Your Opinion?

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23 Responses to Could we cut Canberra’s exorbitant fuel prices?
mjsf mjsf 10:25 pm 02 Nov 18

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…

    madelini madelini 5:09 pm 05 Nov 18

    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.

nealg nealg 3:24 pm 02 Nov 18

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.

Queanbeyanite Queanbeyanite 7:53 pm 01 Nov 18

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

Jessica Brisbane Jessica Brisbane 3:54 pm 01 Nov 18

Costco. The savings on petrol cover my membership several times over

Robert Honeybone Snr Robert Honeybone Snr 9:59 am 01 Nov 18

How many litres can one get from a barrel of oil ?

    Laura Frame Laura Frame 6:11 pm 01 Nov 18

    Robert Honeybone Snr I think about 75L after conversion to petrol.

Rod Phillips Rod Phillips 8:41 am 01 Nov 18

Canberra service stations don't need to compete on price. Canberra motorist are too lazy to shop around and support cheaper fuel. E.g. United servo on Drakeford drive is typically 5-10 cents a litre cheaper than the the Woolies up the road or the Coles discount fuel in Wanniasa. That's compated against the 4 cents a litre discounted price by Woolies and Coles. Yet every afternoon I see people lined up out to the street at the Woolies on Drakefors drv. Its crazy!

If you want cheaper prices, then boycott dearer suppliers!

Gareth Rowlands Gareth Rowlands 7:58 am 01 Nov 18

I have no idea why the ACCC exists. It has zero power to do anything and puts it back on the consumer to "shop elsewhere" great advice.

Keith Alderson Keith Alderson 10:43 pm 31 Oct 18

Canberrra doesn't have a price cycle, it just keeps rising in price regardless

Ben Gray Ben Gray 6:26 pm 31 Oct 18

Fuel used to get transported in bulk to Canberra by rail until 2009. While the bigger gains would be in the real-time fuel data alluded to by the article, could we also get the fuel delivered here by a more efficient mechanism like bulk rail? Would that be a cheaper option rather than having to pay multiple drivers to drive back to Sydney with nothing? That's assuming the fuel distributors and retailers pass that saving on to motorists.

    Ben Jones Ben Jones 11:23 pm 31 Oct 18

    Delivered by Rail ? Which distributors did that ?

    Ben Gray Ben Gray 11:45 pm 31 Oct 18

    Shell was the sole customer by 2009, although BP did receive deliveries into the 1990s. For Shell, fuel was delivered to their site in Fyshwick and then distributed throughout Canberra by truck from there. This same site is the one under consideration for redevelopment as a waste transfer station and hardstand for container loading onto rail as part of the Capital Recycling development proposal.

    Ben Gray Ben Gray 11:48 pm 31 Oct 18

    As an aside, after the last fuel wagons were unloaded in January 2010, they were moved over to the rail yard in Kingston where they still sit to this day.

    Warren Morris Warren Morris 12:59 pm 02 Nov 18

    Ben Gray I worked at Canberra Station from 96, till 06.

    When I started a fuel train would travel overnight from Sydney arriving in Canberra about 5am.

    During the day they would break the train up into 3 and drop fuel cars at BP, Shell and I think Caltex. Then they would join the empty cars back together and it would leave Canberra about 5.30pm and go back to Sydney. It used to be between 30 and 50 cars long, that’s a lot of trucks off the road!

    Ben Gray Ben Gray 3:27 pm 02 Nov 18

    Warren Morris - thanks for sharing your memories. And you’re right- it kept plenty of B-double trucks off the road.

Daniel Duncan Daniel Duncan 6:11 pm 31 Oct 18

How come fuel in more expensive now than when it was $100us a barrel?

    Le Pavoux Matt Le Pavoux Matt 6:57 pm 31 Oct 18

    Shaun Hazell spot on. This has everything to do with the lousy AUD.

    Julie Maynard Julie Maynard 12:05 pm 02 Nov 18

    Daniel Duncan should the retailers also be blamed?

    Daniel Duncan Daniel Duncan 1:46 pm 02 Nov 18

    The retailers only put 2-5c on they make money on bumping up the shop stock.

Mike Long Mike Long 6:02 pm 31 Oct 18

The price of crude oil dropped by $10 a barrel in October, did anyone see a drop on fuel prices, my local put them up by 6 cents a litre

    Laura Frame Laura Frame 6:11 pm 01 Nov 18

    Mike Long i know right? Fuel is cheaper by the barrel now that it was 10 years ago...

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