ACCC Finds Crude Oil Savings Are Not Being Passed On To Motorists

The Australian Competition and Consumer Commission has released its fifth quarterly report into the Australian petrol industry, examining the decline of petrol prices up to the end of December 2015. The report found that the quarterly average price in the five largest cities (i.e. Sydney, Melbourne, Brisbane, Adelaide, and Perth) was 124.4 cents per litre (cpl), which was 8.8 cpl lower than the previous quarter and 11.4 cpl lower than in the June quarter 2015.

"This decrease in prices over the quarter was welcome news for motorists," ACCC Chairman Rod Sims said. "However, retail petrol prices were not as low as might have been expected given the level of crude oil prices."

Sims gives two reasons for this. Firstly, there were high refiner margins during the quarter.

Brent crude oil prices in December 2015 were at their lowest level in over 11 years, and were significantly below their long term average.

However, Mr Sims noted that: "motorists are not fully benefiting from low crude oil prices as they use petrol in their vehicles, not crude oil, and the difference between crude oil prices and international refined petrol prices (i.e. the refiner margin) in 2015 was high".

The annual average difference in 2015 was around USD$16 per barrel, compared with an annual average of around USD 8 per barrel over the last 20 years.

"While international refined petrol prices are strongly influenced by the price of crude oil, they are also determined by their own global supply and demand conditions. As global demand for petrol was relatively strong in 2015, prices remained high relative to crude oil prices. These high refiner margins are outside Australian control," Mr Sims said.

The second factor was the high gross retail margins in Australia in the quarter.

Gross indicative retail differences (GIRDs) are indicative of the margins achieved by retailers on the sale of fuel, and may reflect overall retail profits. The ACCC’s September quarter 2015 report had noted that quarterly average petrol GIRDs in the five largest cities (11.8 cpl) were at their highest level since the ACCC began monitoring in 2002. In the December quarter they increased further, by 0.6 cpl to 12.4 cpl.

"The ACCC believes that retail prices have been unreasonably high in the second half of 2015 and in early February 2016 wrote to the major petrol retailers seeking an explanation for the high retail margins. I expect to receive their responses shortly," Mr Sims said.

In December 2015 the ACCC’s Federal Court proceedings against Informed Sources and five petrol retailers (7-Eleven, BP, Caltex, Coles, and Woolworths) were resolved by way of court enforceable undertakings.

As part of the resolution, from 20 May 2016 Informed Sources will make price information available to consumers for free on a near real-time basis at the same time as it is received by retailers. Even more important, the pricing information exchanged between petrol retailers will also be made available to third parties, including app developers and motoring and consumer organisations.

"The settlement of these proceedings was a big win for motorists. Making this pricing information constantly available to consumers will improve price transparency. It will allow them to make better informed purchasing decisions and therefore create greater competition in petrol pricing. We therefore hope it will lead to downward pressure on retail margins," Mr Sims said.

The recent resolution of litigation between the ACCC and a number of petrol retailers will make price information available to consumers and motoring organisations, which should increase competition and put downward pressure on retail margins.



    Anyone else think this is stupid? "Consumers are being ripped off. Now we'll make they know they're being ripped off, with a hope that the retailers might decide to drop their prices... unless they all know what is being charged and can therefore keep their prices the same".
    Good to see the ACCC still lacks teeth.

    “The settlement of these proceedings was a big win for motorists. Making this pricing information constantly available to consumers will improve price transparency. It will allow them to make better informed purchasing decisions and therefore create greater competition in petrol pricing. We therefore hope it will lead to downward pressure on retail margins,” Mr Sims said.

    the price petrol is still way too high at $1 a litre especially with current price of crude oil only being around 30US a barrel. the price should be 85c a litre for regular unleaded

      I'm not sure if people understand how the costs work with petrol. Theres 45c in tax, a markup per litre for the refinery, distribution, and vendor, which all set a base amount before the barrel cost starts to come into it.

      If those markups are just 10c a litre (pure guess) then theres 75c already needing to be covered before that, before the actual cost of a barrel starts getting figured into things.

      I base the excess for barrel costs at roughly 1c per $1, so a $30 barrel adds 30c to that basic cost. Its not exactly right, but its close enough. So at $20 a barrel, you get around the $1 mark, which is what we've seen. $30 a barrel should be $1.10 or so, not TOO far from the mark.

      85c though? There are just too many default costs to bring the price down that low.

        (Shooting the dark here)

        Judging by past performance, we have seen petrol go from $110 (or something) to <$30 / Barrel (159L) petrol (regular 91 octane) has gone from (about)150 down to (about)110c/L

        SO, the Price We the consuming mugs would be paying, is about 100c/L IF the OIl were Priced at Zero.

        Not sure how the Whizzes at the Oil-Co. come up with their total: at 5c station "markup", ~30c oil production transport and refining costs, $0.38 federal Excise, 10% GST,, 10c state levy (how many of these have been added together over the years, Ok I was wondering, so I simulated the Gate Price of Petrol for Feb 2016... [ NB, the Gate price here "has to be higher than the Singapore Price" we are told, OR the oil companies that refine petrol in Australia would export all of their product and leave Us with nothing, that is how international competition works, If there is no profit motive why sell in any certain market, there IS no loyalty nor national interest, it is jut competition driven (not even the Government has the national interest at heart with any of our collective resources). ]

        0.96 c/L, without GST or final Service-station Profit (probably also transport costs to final destination need to be applied. That brings up the Price to $1.14 without discounting.

        SO the retail price of Petrol would be around 91-95c/L IF the OIL were FREE ($0 / Barrel) out of the ground.

        So who is Price gouging the Most, It is our Elected Officials.

          in 2002 before the price of oil 50US a barrel the price of regular unleaded was 76c a litre in my home town( a regional town thus more expensive than sydney or wollongong) . when it hit 100US a barrel the price then sky rocketed upto 160c a for regluar unleaded. Also keep in mind that the fuel excise tax was frozen before then.

          Then the other crime of Deisel being more expensive than unleaded when it made as part of the refinment process.

    Look up irony in the dictionary and I suspect you'll see the ACCC logo as a definition. This is the same ACCC that allowed 2 of Australia's major grocery chains to destroy the independent network under the guise of competition. That lack of competition is now one of the main causes of higher prices at the bowser (in my humble opinion). Well done ACCC, keep up the good work... err... making big corporations and multinationals stronger... that's what ACCC is here for isn't it???

    Dear ACCC,

    Please tell the consumer something he or she doesn't know.


    Yeah lets boycott petrol stations! who's with me? anyone? helloooo?

      Hm, easier said than done.

      As well as there being big companies there are also independents.

      When one boycotts, it's often the employees of independents that suffer the most.

    So the gov is paying the ACCC to tell us that oils the reason we are getting robbed at the bowser and not the 35c excise plus state tax plus GST?.... Good to know where that excise money is going.

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