The Australian Competition and Consumer Commission today issued its third report on the prices, costs and profits of unleaded petrol in Australia.
The report shows that the main determinants of retail petrol prices in Australia have been:
- the international price of refined petroleum (the Singapore Mogas 95 benchmark which closely follows movements in international oil prices)
- the exchange rate of the Australian dollar against the US dollar
- the well-established weekly retail price cycles which operate in the large capital cities and affect the day-to-day prices of petrol.
Australian retail petrol prices continue to closely follow the Singapore Mogas 95 international benchmark. To a large extent the recent strength in the Australian dollar has protected consumers from the effects of higher international petrol prices.
Overall in 2009-10 Australia had the fourth cheapest retail petrol prices in the OECD.
At the pump
The report shows that in 2009-10 just under 90 per cent of the price motorists pay is taken up by the cost of the refined petrol and taxes. The amount of the bowser price that motorists paid as profits to the petrol companies accounted for an average of 2.9 cpl.
Australian retail prices over this period have been relatively stable with average prices across the five largest cities varying from a low of 116 cents per litre (cpl) in October 2009 to a high of 130 cpl in May 2010, a range of 14 cpl. This stability is in stark contrast with 2008-09 which had a high of 162 cpl (July 2008) and a low of 101cpl (December 2008), giving a range of 61 cpl.
The weekly retail price cycles were again evident in the larger cities, although there were some weeks during 2009-2010 when these cycles did not occur. In addition there were periods when the price cycles moved through the week, meaning that the cheapest day to buy petrol shifted in the week.
The fuel sector
This year saw significant changes in the Australian petrol industry:
- Mobil effectively exited the Australian retail market. This appears to be part of an international movement of integrated oil companies moving out of retail to concentrate on more profitable oil and gas exploration and extraction.
- By buying the retail assets of Mobil, independent chains 7-Eleven and On the Run have significantly increased their retail presence. This continues a trend in the market of specialist retailers, including the supermarket chains, increasing their involvement in fuel retailing.
The report shows an increase in sales of ethanol blended petrol (such as E10) as well as premium unleaded petrol. This is largely a response to the NSW Government’s ethanol mandate and preparation for the Queensland mandate which has now been suspended. Despite the recently announced deferral of the NSW ethanol mandate, given limited domestic production of ethanol and the scheduled increase of the NSW mandate in 2011 and 2012 the ACCC is concerned about the supply and price of ethanol (and therefore ethanol blended petrol) in the next few years, and the impact this will have on the retail price.
The latest report also shows that in 2009-10 independent imports of total petroleum products increased substantially. The proportion of independent imports to total imports has more than doubled to over 10 per cent in the last two years. This provides additional competition to the market which will benefit consumers.