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How low will petrol prices go?

By Lisa Martin - 31 December 2014 77

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Canberra motorists have been treated to a drastic reduction in the price of fuel since the opening of Costco’s petrol station in early December.

On a trip to the Majura Park precinct just before Christmas, I was surprised to see unleaded fuel down to $1.17 a litre at both the Costco and the nearby Woolworths petrol station. I don’t remember the last time I saw petrol that cheap.

This was surprisingly even lower than the price of $1.29 I saw in the Canberra Times on the day the Costco petrol station opened. I didn’t really need to fill up but the offer was too good to drive past seeing as I was there. I don’t have a Costco membership (I simply don’t have room to store bulk quantities in my house so don’t see a need to shop there) so I instead took advantage of Woolworths’ lower prices.

Both outlets had a steady stream of traffic coming through with queues at least three cars deep at each bowser when I was there.

Saving more than 30 cents a litre on usual prices (I usually pay around $1.50 a litre) is a particularly good saving and certainly adds up. But I have to wonder if Woolworths can adjust their prices that dramatically – the mark up on fuel must be substantial.

At the opening of the Costco service station, the NRMA was reported as saying said this was the lowest petrol had been in Canberra in five years. It will be interesting to see if Costco can maintain the low prices in the long term – and if Woolworths will continue to be just as competitive to get the motorist dollar.

Also, as Sydney petrol prices started to fall dramatically recently – with prices touted to go possibly as low as a dollar – it will be interesting to see if the price drop will make it south to Canberra and if the Majura Park outlets will continue to offer substantial savings compared to other outlets.

I’m curious if this has been successful in getting new customers for Costco – or if Woolworths customers (who don’t need a membership but just a free rewards card to get the lowest price) are the real winners.

I’ve become accustomed to paying around the usual $1.40-$1.50 a litre and haven’t previously shopped around. Even using the Woolworths or Coles vouchers only saves you a dollar or two and it doesn’t seem worth it to drive especially to use my voucher. If a Woolworths or Coles service station is located where I’m driving and I need to fill up, then I fill up.

The Majura Park precinct is about a 10 minute drive from my house and I go there every now and then to do grocery shipping. It’s not my closest supermarket but I like it because it’s quieter than Dickson and easier to get a park. Certainly if the price continues to be substantially cheaper than the outlets I usually frequent, I would consider especially making the drive out if I was sitting near empty and getting groceries at the same time.

At least in the short term, the introduction of the Costco petrol station sounds like it is a win for Canberra motorists who frequent the Majura Park precinct, and will likely attract more customers to the centre.

No doubt the highly anticipated opening of Ikea – opening late 2015 according to their website – will also attract more Canberrans to Majura Park.

Do you shop around to get the best fuel price?

What’s Your opinion?


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77 Responses to
How low will petrol prices go?
rosscoact 6:15 am 02 Jan 15

JC said :

dungfungus said :

Is the cheap price in the USA the result of them becoming independent on supplying their own energy now?

Taxes as well.

Just expanding on this. It not fuel independence per se, rather that the US has legislation that their oil producers cannot sell on the world market, thus reducing the base cost. It also reduces export earnings for the US.

Of course the other reason as previously stated, the US has decided to forego the tax that other countries earn on fuel for domestic policy reasons.

Masquara 10:18 pm 01 Jan 15

dungfungus said :

VYBerlinaV8_is_back said :

Just for the sake of comparison, I just got back from filling my rental car at the local servo here in Florida and it cost a smidge under 70 cents Australian per litre, or US $2.18 per gallon. 54 litres burned up by my Dodge Challenger sitting at 135km/h on the freeway and it cost 30 bucks US.

Makes ours seem pricey by comparison, even though in world terms it’s pretty cheap.

Is the cheap price in the USA the result of them becoming independent on supplying their own energy now?

Yep.

JC 8:25 pm 01 Jan 15

dungfungus said :

Is the cheap price in the USA the result of them becoming independent on supplying their own energy now?

Taxes as well.

JC 8:21 pm 01 Jan 15

rommeldog56 said :

When a service station site is auctioned in Canberra, my perception is that Wollies/Coles or their affiliated petrol brands seem to have much deeper pockets to buy the site, hence strangling competition, hence higher prices.

Now, wouldn’t it be nice if for all future petrol station site auctions, Wollies/Coles and the affiliated petrol brands were excluded ? But that would no doubt mean a bit less revenue for the ACT Gov’t.

True that competition is the real issue here, but also much of what you say is not the case at all.

Firstly the sites that are co-branded (except some Woolies sites) are owned by the oil companies with the supermarket entering into naming rights agreements for the shops. Only about 10% of Woolworths/Caltex branded sites are owned by Woolworths.

As for new sites, of the new stations that have opened in recent years in Canberra the only one that I can think of that has gone to the ‘evil’ Woolworths/Caltex Coles/Shell lot is the one at Majura Park, and even then being airport land I doubt it went to any tender anyway.

Other sites that have opened are the new 7Eleven at Casey, which opened in the past few weeks. So one break of your theory.

The Caltex at Gold Creek, a few years ago now of course, which is a privately owned sited which entered into a supply and branding deal with Caltex. (hence no Woolworths branding). So again a break in your theory.

There is of course the ‘newish’ Woolworths owned site at EPIC, but this was done through the purchase of an existing site, so again not open market.

The Caltex at the airport, again a privatley owned site with Caltex branding, so again a break of the theory.

Canberra also still has a lot of privatley owned stations in the suburbs. Ones that are branded just as Caltex are the easiest ones to spot, if they have no Woolworths branding, chances are they are private. There are also a number of 7 Elevens (Melba and Spence come to mind) that are privately owned.

So really ownership of the sites is not the issue.

But trace back through history and what many say causes the lack of competition is the structure of Canberra whereby we put things like servo’s etc in group centres and in the past suburban shopping centres and the like. So each group centre has 1 maybe 2 servo’s and that is it for miles around. Except in places like Braddon and in the past but no longer Dickson, it is hard to shop around so hence the servo’s price accordingly.

switch 6:54 pm 01 Jan 15

dungfungus said :

Is the cheap price in the USA the result of them becoming independent on supplying their own energy now?

Don’t we also have vast reserves of oil rich shale…

dungfungus 5:43 pm 01 Jan 15

VYBerlinaV8_is_back said :

Just for the sake of comparison, I just got back from filling my rental car at the local servo here in Florida and it cost a smidge under 70 cents Australian per litre, or US $2.18 per gallon. 54 litres burned up by my Dodge Challenger sitting at 135km/h on the freeway and it cost 30 bucks US.

Makes ours seem pricey by comparison, even though in world terms it’s pretty cheap.

Is the cheap price in the USA the result of them becoming independent on supplying their own energy now?

MERC600 4:36 pm 01 Jan 15

What gets me is how the petrol price for a litre go as far as showing a percentage of one cent. I mean the one cent piece went the way of the dodo yonks ago. But we still have this on petrol advertising. It annoys me.

Damm. A new years resolution was not to get annoyed. I only lasted till 4.38pm on the first day.

dungfungus 4:25 pm 01 Jan 15

Innovation said :

wildturkeycanoe said :

Why hasn’t petrol in the outer suburbs dropped at all? We are still paying well over $1.35/L in west Belconnen and over Christmas it was still around $1.40+ from here to across the border. I haven’t seen any drop in prices except for maybe 5c/L since before the holidays began.
That being said, I could drive all the way out to Majura at a cost of around $3.50 in fuel, to save around $13 for a full tank. So, I’d have to have a nearly empty tank and waste an hour to make almost $10. Unless there’s any other reason to go there, I’ll just keep paying premium prices for living on the fringe.

I heard yesterday that the prices are starting to come down in Fyshwick – presumably because drivers near Fyshwick are starting to drive to Majura to fill up. Hopefully this domino effect will keep spreading through Canberra.

The big question though is, if and when fuel prices come down around Canberra, how many drivers will keep going out to Costco and continue to punish the cartels for their historical overpricing or reward them for their past practices and simply switch back to their normal servos once the prices start to come down.

The bigger question is what will happen when petrol prices return to normal?
The current situation is being caused by Saudi Arabia deliberately maintaining overproduction to squeeze other producers out of business.
You can bet that big business will use the return to normal prices as an excuse to hike prices and this will probably be concurrent with price increases on imported goods (that’s almost everything we need with a double whammy on petrol) as the effect of our falling dollar takes hold.
Hello, inflation!
This will be a phenomenon that many Canberrans have never had to live with. It will be interesting.

VYBerlinaV8_is_back 2:53 pm 01 Jan 15

Just for the sake of comparison, I just got back from filling my rental car at the local servo here in Florida and it cost a smidge under 70 cents Australian per litre, or US $2.18 per gallon. 54 litres burned up by my Dodge Challenger sitting at 135km/h on the freeway and it cost 30 bucks US.

Makes ours seem pricey by comparison, even though in world terms it’s pretty cheap.

Innovation 9:25 am 01 Jan 15

wildturkeycanoe said :

Why hasn’t petrol in the outer suburbs dropped at all? We are still paying well over $1.35/L in west Belconnen and over Christmas it was still around $1.40+ from here to across the border. I haven’t seen any drop in prices except for maybe 5c/L since before the holidays began.
That being said, I could drive all the way out to Majura at a cost of around $3.50 in fuel, to save around $13 for a full tank. So, I’d have to have a nearly empty tank and waste an hour to make almost $10. Unless there’s any other reason to go there, I’ll just keep paying premium prices for living on the fringe.

I heard yesterday that the prices are starting to come down in Fyshwick – presumably because drivers near Fyshwick are starting to drive to Majura to fill up. Hopefully this domino effect will keep spreading through Canberra.

The big question though is, if and when fuel prices come down around Canberra, how many drivers will keep going out to Costco and continue to punish the cartels for their historical overpricing or reward them for their past practices and simply switch back to their normal servos once the prices start to come down.

Ian 8:16 am 01 Jan 15

Earlier in the week I saw ULP at 133.9/134.99 in those thriving metropolises with highly competitive petrol markets, namely Bermagui, Tathra and Merimbula.

rommeldog56 8:15 am 01 Jan 15

wildturkeycanoe said :

Why hasn’t petrol in the outer suburbs dropped at all? We are still paying well over $1.35/L in west Belconnen and over Christmas it was still around $1.40+ from here to across the border. I haven’t seen any drop in prices except for maybe 5c/L since before the holidays began.
That being said, I could drive all the way out to Majura at a cost of around $3.50 in fuel, to save around $13 for a full tank. So, I’d have to have a nearly empty tank and waste an hour to make almost $10. Unless there’s any other reason to go there, I’ll just keep paying premium prices for living on the fringe.

A very good question. It’s called a rip off/price manipulation by the stations/oil companies. Petrol is also much cheaper in many small country towns than it is in Canberra (even though the price here has dropped – in most places anyway). You have to wonder where the petrol pricing commissioner is in all this – the “evdence” is right in front of their nose – in full public view !

I think that a big part of the problem here is a lack of real competition too. When a service station site is auctioned in Canberra, my perception is that Wollies/Coles or their affiliated petrol brands seem to have much deeper pockets to buy the site, hence strangelling competition, hence higher prices. Now, wouldn’t it be nice if for all future petrol station site auctions, Wollies/Coles and the affiliated petrol brands were excluded ? But that would no doubt mean a bit less revenue for the ACT Gov’t.

wildturkeycanoe 1:49 pm 31 Dec 14

Why hasn’t petrol in the outer suburbs dropped at all? We are still paying well over $1.35/L in west Belconnen and over Christmas it was still around $1.40+ from here to across the border. I haven’t seen any drop in prices except for maybe 5c/L since before the holidays began.
That being said, I could drive all the way out to Majura at a cost of around $3.50 in fuel, to save around $13 for a full tank. So, I’d have to have a nearly empty tank and waste an hour to make almost $10. Unless there’s any other reason to go there, I’ll just keep paying premium prices for living on the fringe.

Holden Caulfield 1:44 pm 31 Dec 14

Further to JC’s final question, I didn’t see 91RON petrol above 113.5 for the 9 days I just spent in Adelaide.

JC 10:50 am 31 Dec 14

Whilst Costco might have forced the Woolworths/Caltex servo next door to drop prices, the price drops are not as a result of Costco opening, rather the drop in global fuel prices.

I was in Sydney the weekend before Christmas and got ULP for $1.16 0(no discount voucher) at the servo on the M4. No Costco anywhere to be seen. Prices elsewhere from what I saw were all mostly sub $1.20. I filled up before leaving Canberra and payed $1.47.

So the real question is why are we paying 20c/l more than Sydney.

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