Page 2382 - Week 07 - Tuesday, 30 July 2019
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and information from the investigation indicates that the market is not serving our community, with service stations charging motorists higher prices than in other capital cities and the surrounding region.
The facts are that Canberra service stations are making nearly twice—I repeat that: nearly twice—the profit of those in nearby regional locations. Petrol prices are influenced by various factors, including wholesale costs, transport costs, retail costs and margins. In Canberra, like in other markets, wholesale costs and Australian government taxes make up most of the retail price.
The ICRC found that while petrol retailers have limited control over most components of the petrol price, in Canberra, retail costs and margins accounted for around 14 per cent of the petrol price in 2018, compared with around 10 per cent nationally. During the past three years the average petrol price in Canberra rose gradually from about 120c a litre to around 160c a litre in the final months of 2018, before reducing and settling between around 145c and 150c per litre in May 2019.
The ICRC found that ACT petrol prices in general tend to follow the wholesale price of fuel at the Sydney fuel terminal, the terminal gate price, with a longer lag than in Sydney. Canberra petrol prices are much slower to respond to changes in the terminal wholesale price than in Sydney, on average, two to three weeks compared with two to three days in Sydney. And surprise, surprise, Madam Assistant Speaker! They are faster on the way up than they are on the way down.
Viva Energy has been setting prices for Coles Express sites since March 2019. The ICRC considered that as Coles Express accounts for 15 of the 58 sites in Canberra’s retail petrol market, this might have contributed to lower Canberra average retail prices in the months of April and May 2019.
Prices in Canberra are generally higher than in Sydney and most other capital cities. For example, annual petrol prices in the ACT were consistently higher than in Sydney by around 8.4c a litre on average for the past six years. There were only two months that prices in Canberra were lower than in Sydney over the period from January 2013 to May 2019.
Compared to the surrounding towns and locations on the south coast, the Hume Highway and inland, ACT prices were found to be 1.7c per litre higher on average. But there can be substantial variations in price differences on any given day. The ICRC’s analysis suggests that 80 per cent of this price differential, compared to interstate locations, is due to the presence of higher retail margins in Canberra. The ICRC’s analysis showed there were some instances where Canberra prices were lower than in the towns on the south coast and Hume Highway. Compared to inland towns, prices in Canberra were lower in 58 per cent of the months surveyed.
The ICRC’s analysis suggests that petrol retailers in Canberra are consistently more profitable than those in Sydney or on average across Australia. For example, in 2016-17 the average annual net profit per site in Canberra was around $670,000, compared to the national average of $400,000, whilst going back to 2014-15, it was $600,000 in Canberra compared to $500,000 in Sydney. So retail profits have gone up
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