ACCC & AER annual report 2016-17

Analysis of performance: Fuel price monitoring

Deliverable 3.2

Provide industry monitoring reports to government in relation to highly concentrated, newly deregulated or emerging markets

The ACCC’s work in fuel price monitoring contributes to Deliverable 3.2.

We monitor the downstream petroleum industry, including the refining, importing, wholesale and retail sectors, as directed by the Minister under Part VIIA of the Act. Our role in this sector has changed focus in recent years given the high level of community concern over fuel prices and the degree of competition in retail fuel markets in metropolitan and regional locations. We keep abreast of industry developments and provide timely information and advice to government and the public through our monitoring and reporting role in this sector.

Our fuel monitoring program has three broad objectives:

  • to comply with the current ministerial direction by analysing prices, costs and profits in the downstream petroleum industry
  • to improve consumer awareness about the petrol industry
  • to focus on areas where competition may be less effective and on industry conduct that we may need to consider more closely.

Implementation of fuel monitoring arrangements

In December 2014 the then Minister for Small Business, the Hon. Bruce Billson MP, gave the ACCC a new direction1 to monitor prices, costs and profits of unleaded petroleum products in Australia for three years, and report at least four times per year. These arrangements enable us to undertake more timely and targeted monitoring and analysis of particular topics and fuel markets that are of concern to consumers.

This year, our priorities relating to fuel price monitoring were to undertake detailed petrol market studies on selected regional markets and provide quarterly reports on the Australian petroleum industry.

Four petrol market studies have been completed since we received the new monitoring direction. The first report, on the Darwin petrol market, was released in November 2015, followed by reports on the Launceston, Armidale and Cairns petrol markets in 2016–17.

The ACCC will review the lessons learned from these petrol market studies and report on the findings in 2017–18.

Petrol market studies


The ACCC released its second market study, on the Launceston petrol market, on 20 July 2016. It found that, if the Launceston market were more competitive, motorists could expect savings of 4 to 5 cents per litre (cpl) on a sustainable basis.

The report noted that petrol prices in Launceston were significantly higher than prices in the five largest cities (Sydney, Melbourne, Brisbane, Adelaide and Perth) in the last five years. Launceston motorists paid on average around 12 cpl more for petrol than motorists in the five largest cities. The three main factors leading to higher prices in Launceston were higher transport costs, higher operating costs and higher retail margins and profits. There was also relatively weak retail competition in Launceston.

A discount arrangement between the Royal Automobile Club of Tasmania and United Petroleum in early 2016 resulted in increased competition and lower prices for consumers. The ACCC found that greater price transparency combined with discounting initiatives can lead to direct benefits to consumers.


The ACCC released its third petrol market study on 21 November 2016, revealing that a lack of competition led to consistently high prices in the Armidale petrol market.

The report noted that petrol prices in Armidale were significantly higher than those in the five largest cities and in smaller surrounding towns such as Glen Innes. Between 2012–13 and 2013–14 Armidale motorists paid on average around 8 cpl more for E10 (regular unleaded petrol (RULP) with up to 10 per cent ethanol) than motorists in the five largest cities paid for RULP.

The main reasons for the higher prices in Armidale were higher transport costs, higher retail operating costs per litre and, importantly, higher retail margins and profits associated with this small and relatively concentrated market. The report noted that the recent entrance of an active discounter led to average petrol prices in Armidale decreasing relative to those in nearby Glen Innes.


The ACCC released its fourth petrol market study on 30 May 2017, on the Cairns petrol market. The report identified that: there are high transport costs for supply of petrol into Cairns; wholesale operating costs and margins are higher than in many other markets because of the relatively small size of the Cairns market; retail operating costs per litre are high in Cairns; and retail margins are also high in Cairns.

The report observed that profits per site in Cairns were around 38 per cent higher than the Australian average. It noted that weak retail competition in Cairns appeared to be a prime cause of higher retail margins and profits.

Like the ACCC’s other regional petrol market studies, this report observed that increased transparency and promotion of vigorous and effective price competition can lead to lower retail petrol prices.

Quarterly petrol monitoring reports

During 2016–17 the ACCC published four quarterly petrol monitoring reports, which provided analysis and commentary on a number of topics. These included movements in:

  • average prices in the five largest cities and around 190 regional locations
  • gross indicative retail differences (the difference between retail prices and published wholesale prices) in the five largest cities
  • international crude oil and refined petrol, diesel and automotive LPG (autogas) prices.

The reports also provided analysis of issues such as price differentials between regional locations and capital cities, and petrol price cycles, as well as reporting on developments in the industry and ACCC activities over the quarter.

We found that usage of fuel price apps and websites increased significantly in 2016, from around 4 million hits in the December quarter 2015 to around 21 million hits in the December quarter 2016, providing improved transparency in the petrol market. These services, along with the ACCC’s web-based information on recent petrol prices in the five largest cities, including consumer ‘buying tips’, are helping motorists to pick the best times to buy fuel and the cheapest locations.

Informing stakeholders

The ACCC’s fuel-related web pages, continued to be some of the most visited pages on our website. In 2016–17 the petrol price cycle webpage received 310 185 page views, making it the second most viewed page on the ACCC website for the year. We continued to make pricing information available to consumers to improve transparency about price movements. Commentary on retail market conditions through media releases and other media engagement complements the information in our general petrol market reporting and the release of findings from selected petrol market studies.

In November 2016 and May 2017 the ACCC hosted half-yearly meetings of the Fuel Consultative Committee. We provided updates on our recent fuel-related activities, including the progress of our quarterly monitoring reports and petrol market studies, recent enforcement outcomes and merger assessments, and monitoring of the implementation of the undertaking given by Informed Sources to the ACCC in December 2015 to resolve proceedings relating to petrol price information sharing.

Members of the committee provided updates on a range of matters, including developments in the Australian downstream fuel supply chain, views on ACCC fuel monitoring activities, implementation of the FuelCheck arrangements in New South Wales, the increased availability of fuel price information via the internet and apps, and the impact of government regulation.