The Australian Competition and Consumer Commission has released the third quarterly report into the Australian petroleum industry for 2015.
“There are some in the community that believe that the ACCC sets fuel prices, or can take action if fuel prices are set significantly above cost. This is not correct. The ACCC does not set wholesale or retail petrol prices in Australia, and it is not illegal to price above cost. Petrol prices are determined by the market,” ACCC Chairman Rod Sims said.
“The aim of the quarterly monitoring reports is to provide timely information on fuel price movements in all capital cities and around 180 regional locations and the drivers of those prices. Through its monitoring reports, the ACCC is enhancing the transparency of the petroleum industry and aims to increase public awareness of the factors that determine retail petrol prices in Australia.”
The most recent report shows that in the June quarter 2015 the average retail petrol price in the five largest cities (i.e. Sydney, Melbourne, Brisbane, Adelaide and Perth) was 135.8 cents per litre (cpl). This was 16.9 cpl higher than in the March quarter 2015 (118.9 cpl). The increase was influenced by rising international crude oil and refined petrol prices and a marginally weaker AUD–USD exchange rate.
The differential between average petrol prices across all regional locations and average petrol prices in the five largest cities decreased substantially over the last two quarters to only 0.7 cpl in June 2015. This compared with a differential of 17.5 cpl in December 2014 and 1.9 cpl in March 2015. In June 2015 monthly average petrol prices were lower than the five city average price in 77 regional locations. These represented around 43 per cent of regional locations monitored by the ACCC.
“In the second half of 2014 regional prices were slower to fall following decreases in international refined petrol prices, compared with prices in the larger cities. They were also slower to rise in the March and June 2015 quarters,” Mr Sims said.
“The differential in June 2015 was particularly low and is likely to increase, to some extent, in coming months once international refined petrol prices stabilise.”
The monthly average petrol price in Darwin in June 2015 was 134.9 cpl, which was 5.7 cpl lower than in the five largest cities (140.6 cpl).
“This was the first—and only—time that monthly average Darwin prices were lower than in the five largest cities since the ACCC started to regularly collect Darwin prices in January 2000,” Mr Sims said.
“Given that Darwin prices were relatively high in the second half of 2014, the decline in Darwin prices is welcome. This decrease could have been influenced by factors such as the recent discount arrangements between the Automobile Association of the Northern Territory and United Petroleum sites in Darwin, and the increased scrutiny of Darwin prices by the Northern Territory Government, the ACCC, and the wider community."
The ACCC is currently undertaking regional market studies in three locations - Darwin, Launceston, and Armidale – and expects to complete at least two of these studies by the end of the year. These studies aim to explain each component of the prices paid at the bowser to understand why prices are higher in these regional locations. The ACCC is using its mandatory information gathering powers to obtain relevant information for these studies.
In the 2014–15 financial year the average retail petrol price in the five largest cities was 134.1 cpl. This was 16.5 cpl (11 per cent) lower than the average price in 2013–14 (150.6 cpl).
While retail prices were considerably lower than in the previous year, they were adversely affected by a weaker AUD–USD exchange rate. In 2014–15 the average AUD–USD exchange rate was USD 0.84. If it had been at the same level as in 2013–14 (USD 0.92) retail petrol prices in 2014–15 would have been around 6 cpl lower.
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.
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