Drivers are being slugged at the petrol pump as fuel retailers take advantage of recent attacks in Saudi Arabia to set record-high profit margins.
Motorists in the east coast’s major cities can expect to pay up to 173.9 cents a litre if they fill up this week, despite terminal gate prices – the price at which retailers buy their fuel – sitting at an average of 135 cents a litre.
The nearly 40-cent-a-litre difference represents the largest profit margin Australian fuel retailers have ever charged, according to general manager of fuel analytics firm FuelTrac, Geoff Trotter.
“When I worked for Shell 30 years ago, we never in our wildest dreams would have thought to try getting away with a 40-cent margin,” he said.
“Why do these companies think a 40-cent margin is acceptable? If you go back to 2010, we had a 20-cent margin, and before that it was even smaller.”
Even at the bottom of the fuel industry’s discounting cycle – which sees retailers jack up prices every few weeks before gradually lowering them over an extended time period – margins are higher than they historically have been.
Mr Trotter said it was “disappointing” that government and the ACCC have so far taken no action to reduce or cap fuel prices.
“The cost of owning and operating a vehicle is one of the largest ones facing households, and the ACCC will get involved in energy prices or the minute details of bank interest charges, but won’t act to fix the problem,” he said.
“Even last week they released a report on petrol prices showing we’re being ripped off. Now we want to know what they’re going to do about it.”
Saudi attacks ‘cover’ high prices
The prices Australians are currently forced to pay better reflect the cost of petrol immediately following the September attacks on Saudi Arabian oil facilities, which wiped out 5 per cent of global oil production overnight.
That attack saw the price of Brent Crude oil rise from $US60.38 ($87.83) a barrel to $US69.02 ($100.40), and the West Texas Intermediate (WTI) price climb from $US54.85 ($79.78) to $US63.90 ($92.95).
But AMP chief economist Shane Oliver told The New Daily those prices were a “two-day wonder”, and the current price Australians are paying “isn’t justified” by the short-lived spike.
Brent Crude oil is trading at $US59.05 ($85.89) a barrel, while WTI is slightly cheaper at $US53.35 ($77.06) – both are now cheaper than they were immediately before the attacks.
“My worry is that people will use the attacks as a cover to raise prices. Retailers are establishing a new range, and consumers will get used to paying for it,” Mr Oliver said.
Ryan Felsman, a senior economist at Commonwealth Bank’s stockbroking arm CommSec, said he would only expect motorists to be paying $1.50 a litre based on the current terminal gate prices.
“But East Coast retail petrol prices are already at or above that level today, suggesting that retailers are locking in some profits following the conclusion of the most recent discounting cycle,” he said.
Mr Felsman noted that as prices on the east coast hit those $1.70-a-litre highs on Friday, the price of crude oil ended its second consecutive week in decline.