The Australian Competition and Consumer Commission (ACCC) has issued a statement calling on petrol retailers to reduce their prices in line with international price drops.
With a decrease in demand due to the outbreak of COVID-19, and uncertainty as major global suppliers alter oil production, the weekly average international crude oil price has plummeted around $50 USD per barrel since the beginning of 2020, with the Australian wholesale petrol price dropping close to 50c per litre in the same time period.
However, the ACCC has stated that petrol retailers should not use the pandemic as an excuse to increase profits.
“The drop in crude oil price is good news for Australian motorists,” said ACCC Chair Rod Sims. “At this time the Australian economy needs all the assistance it can get, and lower crude oil prices are one of the very few positives from current world events.
“In the larger capital cities, petrol retailers took too long to pass on the savings from the rapid drop in international oil prices, and this does not reflect well on them.”
Since the start of the year, the seven-day rolling average in Australia’s five largest capital cities – Sydney, Melbourne, Brisbane, Adelaide and Perth – dropped around 45c per litre, with regional towns and cities, including capitals such as Darwin, Hobart and Canberra, seeing a slower and more varied price drop.
“We have previously found that the lack of vigorous and effective competition in some regional locations was a major reason for higher prices in those locations,” said Mr. Sims. “Where there is competition, you tend to see lower prices.
“Giving your business to outlets that are pricing competitively sends a strong message to those who have high prices that they will lose your business. We recommend motorists compare prices on fuel price apps and websites, such as MotorMouth and the government schemes in NSW, WA and the NT, which also provide information on retail prices in regional locations.”
The consumer watchdog also outlines that regional areas experience increased costs due to a lower population and demand, higher transport cost and less convenience sales, with price changes in some regional areas lagging up to six weeks behind major capital cities.
“Especially at this time, retailers must not take advantage of the situation to increase their profits, but should pass on savings to motorists,” Mr Sims said. “The ACCC’s role is to monitor the market closely, and we will continue to do this, particularly to keep the pressure on the petrol retailers at this time.”
The ACCC’s monitoring role is part of a new direction set down by the Australian Treasury in December 2019, in which the ACCC will prepare quarterly petrol monitoring reports for a period of three years, focusing on all major capital cities as well as over 190 regional areas across Australia. The first of these reports was published in March, 2020.
The ACCC also recently published a report analysing the Australian petroleum industry from 2002 to 2018, in particularly the downstream affect from refineries to local retailers and wholesalers.
Will petrol get cheaper?
There has been no word from the ACCC as to whether petrol prices will fall further, although graphs based on price cycling published on its website indicate that prices in the major cities are on a downwards trend.
However, with uncertainty coming out of oil refineries and global producers, there is no guarantee as to whether international crude oil will drop further, although motorists may see a further price drop as the ACCC encourages retailers to pass on the savings.