The Australian Competition and Consumer Commission has announced Darwin as the first regional location being studied under the new petrol monitoring arrangements launched by the Minister for Small Business, the Hon Bruce Billson MP, in December 2014.
The aims of the regional market studies are to get to the bottom of why prices are higher in certain regional locations and to identify and explain each component of the prices paid at the bowser.
“Petrol prices in Darwin are among the highest in Australia. Annual average retail petrol prices in Darwin in 2013-14 were around 170 cents per litre, which was almost 20 cents per litre higher than in the five largest capital cities,” said ACCC Chairman Rod Sims.
“Petrol prices in Darwin are consistently higher than in Katherine, which is far smaller and more than three hundred kilometres inland. Furthermore the differential between Darwin prices and prices in the five largest capital cities has increased in recent years,” Mr Sims said.
The ACCC will examine petrol markets in at least a further two regional locations by the end of the year. The ACCC will announce the next two regional locations to be selected for a market study over the coming months.
“The ACCC receives many complaints from across Australia that petrol prices are too high, and are priced well above cost. Some then argue for some form of ACCC action. However the ACCC has a price monitoring role, not a price setting role, and pricing above cost is not against the law for petrol or any other consumer good,” Mr Sims said.
“Our previous price monitoring work has been done at a macro level, to explain the high level price drivers. Under the new petrol price direction from Minister Billson we are now examining the prices drivers at a local level.”
“We see three potential benefits from these ‘deep dive’ regional market studies. First, simply providing greater transparency will empower. Second, we could make recommendations for change to some tier of government. Third, we may find a breach of the Competition and Consumer Act that was not otherwise apparent,” Mr Sims said.
The ACCC is using its compulsory information gathering powers under Section 95ZK of the Competition and Consumer Act to require information from fuel companies at every level of the supply chain leading into Darwin.
“The only way to get the information we need is to issue compulsory information gathering notices. We acknowledge that these will place a burden on those companies receiving the notices,” Mr Sims said.
“To understand why petrol prices are so high we need deep and detailed information about every step of the supply chain. Gathering and analysing this complex data will take considerable time,” said Mr Sims.
“We are currently sending the first round of notices to the major fuel companies in Darwin and further requests for more detailed information will be sent out in coming weeks,” Mr Sims said.
The ACCC is very interested in obtaining information from consumers, industry participants, stakeholders and any other interested parties regarding the petroleum industry in Darwin. Relevant information can be provided to the ACCC via its website at: https://consultation.accc.gov.au by 31 May 2015.
On 9 December 2014, Minister Billson directed the ACCC to monitor the prices costs and profits relating to the supply of unleaded petroleum products and report at least quarterly for a period of three years.
Under these arrangements the ACCC will produce two types of reports in 2015:
- quarterly ‘macro’ reports looking at petrol price movements and what drives them overall; and
- market studies looking at ‘micro’ issues in considerable depth, including analysing the price drivers of petrol in three regional markets.
The first of the ‘macro’ reports was released last week. See Quarterly report on the Australian petroleum industry - February 2015
The ACCC monitors fuel prices in all capital cities and around 180 regional locations across Australia.