Petrol retailers have driven up their petrol price margins to record levels despite increased surveillance from the Australian Competition and Consumer Commission (ACCC) and the spread of online price comparison tools intended to stimulate competition.
More Australian motorists may have benefited from some of the lowest fuel prices since 2002, but average margins extracted at the pump rose to the highest level since the consumer watchdog started monitoring the industry.
Global oil prices dropped by more than 10 per cent over the June quarter, while prices at Australian pumps fell by just 3 per cent over the same period.
The ACCC’s June quarter report found retail margins remained high despite quarterly average petrol prices in the five largest cities dropping by 3.9 cents per litre (cpl) from the March quarter to 125.2 cpl.
“While motorists are enjoying the cheapest petrol since 2002, we believe prices should have been even lower given the continuing high gross retail margins,” ACCC chairman Rod Sims said.
The ACCC report noted the increase in gross margins since 2014-15 may partly reflect regulatory and compliance costs, especially in NSW.
However, it said the increasing costs do not fully explain the sharp increase in margins.
“Prices at the pump in 2016-17 are reflecting the relatively low international price of refined petrol which fortunately is a result of the OPEC cartel failing to successfully restrict the supply of crude oil,” Mr Sims said.
“Of the price paid at the bowser, 42 per cent is the international price of refined petrol. Another 42 per cent is taxes —GST and excise.”
Regional motorists hardest hit
The report found regional areas were particularly affected by high margins.
Of the four regional centres the ACCC studies only Darwin’s market was set around the long-term competitive price for fuel.
However, the ACCC still found Darwin motorists were paying around 10 cents per litre more than they should have been in a competitive market.
Retail prices in Launceston, Armidale, and Cairns remained above a long-term competitive cost-based price in the June quarter 2017.
“We encourage people to use fuel price apps to locate petrol stations in their area with relatively lower prices,” Mr Sims said.
The ACCC’s recent Cairns petrol market study revealed that petrol stations in the city were making about 38 per cent higher average net profits than other sites around Australia in 2015-16.