Petrol prices at four-year high, says ACCC

The price of petrol in Australia's biggest cities has reached 145 cents per litre – the highest figure in four years – a report from the Australian Competition and Consumer Commission has revealed.

Over the past three months the average price of petrol in Sydney, Melbourne, Brisbane, Adelaide and Perth rose by seven per cent, the ACCC has explained in a press release. It follows a period of relatively low prices and market stability between the financial years 2013/14 and 2016/17.

For the last financial year (2017/18) however, the average price of petrol increased by 10 per cent. Much of that increase results from external factors beyond the control of the federal government and the local oil industry.

"The major factors driving higher prices were an increase in international crude oil and refined petrol prices, and a lower AUD-USD exchange rates," ACCC Chair Rod Simms was quoted saying in the press release.

"The OPEC cartel in particular continues to have a damaging effect on Australian petrol prices. In late-2016 OPEC, and some other crude oil producing countries, agreed to cut production. This restricted supply into the market, which has clearly started to bite through steadily increasing petrol prices in the past financial year.

"A weaker Aussie dollar has also increased costs for wholestalers buying peto9rl for the Australian market, which flows through to consumers who pay for this at the pump."

But the ACCC boss also notes that petrol retailers hiked up profit margins to a new record in 2017/18. The average gross profit across the five largest capital cities during the financial year jumped to 12.4 cents per litre.

"Current gross retail margins in the five largest cities are now over 50 per cent above the 16-year average since the ACCC began tracking this data," said Simms.

Petrol prices in Brisbane are higher than in the other four capitals and that has been the case for 18 of the past 24 months.

The ACCC encourages motorists to save money by shopping around.

"Cost of living pressures are high and petrol is a major purchase in weekly budgets. Motorists can manage this cost by using fuel price apps and websites to reward retailers offering the lowest price," Simms recommended.

"If retailers know that price is the number one consideration for consumers when choosing where to buy their petrol, it gives them a very clear incentive to be as competitive as possible with their pricing."

Simms also advises motorists to avoid buying petrol at the peak of the pricing cycle.

"For example, in Sydney, if motorists had avoided buying E10 on the six days around the price cycle peaks in the previous six months, they would have paid on average around 2.7 cpl [cents per litre] less.

"For an individual tank of petrol, this saving represents just a few dollars, but over the course of a year, the savings stack up. Assuming similar savings for the other types of petrol, the estimated overall savings for Sydney motorists over a year would be in the region of $95 million."

For Melbourne motorists that would translate to $85 million saved based on a price 2.5 cpl lower. In Brisbane the savings would be $45 million from 2.4 cpl lower and in Adelaide the savings would mirror Brisbane's, but based on an average price reduction of 4.7 cpl.

"The savings are even greater for those who fill up less frequently and therefore are able to buy petrol when prices are falling," Simms said.

Prices in regional areas remain on average 4.4 cpl higher than the major cities. The ACCC promises to continue monitoring prices in Darwin, Launceston, Armidale and Cairns.

"In all these locations, gross retail margins and prices continue to remain high. However, it's worth noting that prices in Cairns, while still high, are getting more competitive. This correlates with more vigorous competition following independent retailer United increasing its presence in the Cairns area," Simms commented.

Picture courtesy of Bidgee/Wikimedia Commons