16 December 2015
by Joanna Mather

Petrol retailers fail to pass fall in crude oil price on to motorists

Petrol companies have been accused of gouging motorists after the consumer watchdog released evidence they are refusing to pass on the fall in crude oil prices.

The Australian Competition and Consumer's Commission's quarterly petrol price report shows that in September gross retail margins were at their highest level since it began monitoring in 2002.

"We will be closely monitoring gross retail margins in the coming months, because high retail margins likely indicate increased profits of the petrol companies at the expense of motorists," Australian Competition and Consumer Commission chairman Rod Sims said.

Gross retail margins are the difference between average pump prices and the average listed wholesale price. It includes overheads, taxes and retail profit.

In capital cities during the September quarter, motorists were stung hardest in Sydney and Brisbane, where the difference between wholesale costs and the pump price was 14 cents a litre.

That was was six cents per litre higher than in Melbourne.

Several days ago the price of crude oil plummeted to its lowest level in nearly a decade, which should put downward pressure on petrol prices. The benchmark oil price has fallen by about 35 per cent over the past year.

But the weaker Australian dollar also serves to push up prices.

Mr Sims said the exchange rate could have a huge impact on prices at the pump.

"Retail petrol prices did not fall by as much as international prices, in part due to a weaker Australian dollar," Mr Sims said.

For instance, if the exchange rate was at the same level as it was in January 2013, retail petrol prices in the September quarter 2015 would have been around 20 cents per litre lower, he said.

During the September quarter the average retail petrol price in the five largest cities - Sydney, Melbourne, Brisbane, Adelaide and Perth - was 133.2 cents per litre in the September quarter, down 2.6 cents per litre from the June quarter.

Average gross retail margins in the five largest cities were 11.8 cents per litre, an increase of 1.3 cents per litre from the June quarter.

However, prices in regional centres were quicker to fall than in January of this year, when international crude prices also dropped.

Armidale in NSW will be the target of the ACCC's third regional market study.

The first study was in Darwin in March 2015 and the second in Launceston in May.

The Darwin report found that high prices in recent years added around $9 million per year to the petrol bill for Darwin motorists.

The report also found that net profit per site in Darwin was extremely high, at around $1.2 million per site in 2013-14. This was significantly higher than in Adelaide, where net profit per site for most of the same companies ranged from $100 000 to $200 000."

"The higher prices and profits in Darwin were evidence of weak retail competition," Mr Sims said.