4 May 2020

Petrol retailers blink after Barr ultimatum

| Dominic Giannini
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Petrol prices

A range of petrol prices around Canberra on Monday, 4 May. Photo: Michelle Kroll.

Petrol prices across Canberra have started to come down to around $1 a litre after Chief Minister Andrew Barr issued an ultimatum to large retailers who were not passing on savings to consumers.

Mr Barr threatened to legislate a maximum retail margin for retailers in the territory after many refused to drop the price of petrol in the ACT despite a drop in global oil prices.

Most pumps in the ACT now have E10 sitting between 99 to 102 cents a litre as of 12:00 midday today (4 May) according to PetrolSpy Australia; however, motorists can fill up for as little as 71 cents a litre at the 7-Eleven in Mawson.

In comparison, the majority of retailers just over in the border in Queanbeyan and Jerrabomberra have prices sitting around 110 cents a litre.

Mr Barr said that there is still room for prices to fall but conceded that large retailers had come to the table after significantly dropping prices in the last two weeks.

“I think there is room for [prices] to fall further. I will get a report on the national market, what the wholesale prices are, what the terminal gate prices are, we will then set a new target for retailers across the ACT,” he told ABC Radio this morning.

“From where we were two weeks ago was $1.20 a litre, and where we are now is about $1 a litre. It has worked.

“I think the petrol retailers, particularly the majors, have responded well to the position I put to them over the last two weeks, and Canberra has seen the greatest fall in petrol prices of any city in Australia over that time period.”

Petrol prices

What a difference a week makes. Petrol prices in the ACT on 29 April. Photo: Michelle Kroll, Region Media.

Petrol prices across Canberra will have to remain around the same price as the national average – which takes into consideration prices from the cheapest discount fuel to rural stations – to keep the government from intervening in the market, Mr Barr said.

“The challenge now, though, is to sustain this effort. What I have put to the major fuel retailers is that the benchmark price for the Canberra market that would not see the government intervene is the Australian average price for fuel across the nation,” he said.

“No one is saying petrol retailers cannot make a profit. The issue here is the size of that profit and what we have seen over the last two weeks is that with this sort of government intervention we can bring those profit margins down to a sort of Australian industry standard.

“That is exactly what we have done, but we need to keep this up now.”

According to Mr Barr, the ACT Government will not look to track every station down to a decimal point, but he expects the Canberra market to be around the national average price.

Operation and transport costs are a contributing factor to more expensive fuels in the capital as opposed to other major cities, a point Mr Barr has conceded can add six to seven cents a litre to the price of fuel. But he said this was no excuse for the exorbitant prices charged a fortnight ago.

Competition in the sector is a concern for the ACT Government. Last week Mr Barr said he had written to half a dozen retailers inviting them to open service stations in Canberra to help drive downward pressure on prices through increased competition.

In the immediate term, competition will fall. Costco Wholesale, consistently the cheapest fuel outlet in the ACT for its members, announced it was closing its pumps from 14 May until mid-June to expand its services, further weakening competition in the market for a few weeks.

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Barr has done nothing about petrol price gouging in Canberra for decades. The community and media should have pushed him much harder to do something like this.

If you are a Caltex service station in Canberra that is independently owned your current buying price for E10 is 95.01 cents per litre. Transport costs are 4.5 cents per litre. Which one of you would be happy to run a business where the government can tell you that you are now only allowed to make 0.5 cents per litre because its an election year. All that is going to happen from this is the major companies will buy the remaining independent Canberra owned fuel stations and the price will go back up and stay up. What happens when Andrew Barr gets a leaky tap at home and he isn’t happy with the call out cost for the plumber?

That’s always the problem isn’t it? In a free market it is near impossible to regulate prices, someone wins someone looses. Though I guess the bigger issue for the independents is the same as the motorist which is price gouging by the petrol supply companies. If the gate price for company owned sites is X that should be the gate price for independents who they supply.

Out of interest the Canberra times article says there are 9 genuine independent service station sites in Canberra but didn’t name them. Can you name them so that people who care can actually support them?

Reading comments here and elsewhere I don’t think many people actually understand what an independent service station really is.

I don’t think most understand that true independents mostly carry oil company branding and service stations calling themselves independent (Metro/United) are not really as independent as they portray themselves.

Not sure exactly, I know the Fyshwick BP and Fyshwick Caltex are independent. The new BP at Nicholls is independent as well.

Capital Retro9:32 pm 04 May 20

Just how much petrol is being sold in Canberra. We are not allowed to go anywhere, remember? There is little demand for petrol just like there is now little demand for toilet paper with the supermarket shelves full again yet the brand that was selling 24 rolls for $11 is now selling 8 rolls for $9. That’s nearly a 300% increase!

Are you going to give the supermarkets an ultimatum too, Mr Barr?

HiddenDragon6:03 pm 04 May 20

One of our budding local film-makers could do a re-make of Wag The Dog – Bash The Bowser (petrol, not Nintendo) – “so edgy, so topical, so now…..”

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