Petrol prices have hit a 22-week high and are still rising in several major cities, with no relief until after Easter for many drivers.
The national average price for unleaded petrol rose 3.5 cents per litre last week to hit 144.5 cents per litre – the highest since mid-November – and some cities could still have several days to go before prices start to retreat, the Australian Competition and Consumer Commission said.
Part of this increase comes down to a jump in the price of crude oil (the base ingredient in petrol production), but Fueltrac general manager Geoff Trotter said the price jump at the pump in the days before the Easter long weekend is more than just bad timing.
While the price Australians pay for petrol is driven by the wholesale prices paid around the world, it’s also driven by the discounting cycle of petrol retailers, which the ACCC notes is “not directly related to changes in wholesale costs”.
In other words, the price fluctuations at the pump are driven by deliberate pricing strategies used by major petrol companies, and Mr Trotter said this is one of the primary drivers of high prices in the days before the public holidays.
“At the moment you’ve got the confluence of a couple of things: You’ve got the underlying increase in the price of crude oil, but then on the top of it you’ve got the petrol companies in their price-cycle increases going that much higher again,” he said.
Aligning the cycle
The price cycle used by the major retailers does not follow a pre-determined pattern (outside of Perth, which has a unique weekly cycle making Monday the cheapest day to fill up) and can vary greatly in the length between low points.
In 2018, the shortest cycle was 14 days, while the longest lasted a full 54 days before prices began to reset.
This gives retailers the flexibility to align the high points in the cycle with major events, such as the Easter long weekend, Mr Trotter said.
“These are the things they can do when you talk about school holidays and Easter. They can change the cycle and determine when they jack the price up.”
Mr Trotter said the size of the most recent increases in price wasn’t “unusual”, but noted that in most cities, the increases were “in line with the holidays and long weekend”.
The theory that retailers are timing their price peaks with holidays is not without its critics.
Compare the Market spokesperson Jenny Williams pointed out that Christmas 2018 coincided with a cyclical low point, despite it being “the ideal time to cash in”.
“I think it’s coincidental that the peaks have lined up with long weekends,” she said.
What’s more, in most cities, prices appear to have already hit their peak and should continue to decline before the public holiday kicks off, meaning “if people actually wait until Thursday they’ll get lower prices”, Ms Williams said.
Deals still out there
While the recent spike may simply be bad timing, Ms Williams said it highlights the importance of shopping around for better deals.
Ms Williams said drivers should take advantage of apps and websites that show petrol prices across as many retailers as possible, and be sure to check neighbouring suburbs in case cheaper fuel is available down the road.
Independent retailers are also a safer bet than many large chains, as they’re often forced to offer more competitive prices than the bigger chains.
Mr Trotter added that by using the ACCC’s petrol price cycle publications, keen drivers may be able to time their fill-ups with the cycle low points and save themselves a few extra dollars.