report on the australian petroleum market report title · 2 report the ustralia petroleum...
TRANSCRIPT
accc.gov.au
Date published
Subtitle
Report title
Date published
Subtitle
Report title
accc.gov.au
Report on the Australian petroleum marketSeptember quarter 2020
December 2020
Australian Competition and Consumer Commission 23 Marcus Clarke Street, Canberra, Australian Capital Territory, 2601
© Commonwealth of Australia 2020
This work is copyright. In addition to any use permitted under the Copyright Act 1968, all material contained within this work is provided under a Creative Commons Attribution 3.0 Australia licence, with the exception of:
� the Commonwealth Coat of Arms
� the ACCC and AER logos
� any illustration, diagram, photograph or graphic over which the Australian Competition and Consumer Commission does not hold copyright, but which may be part of or contained within this publication.
The details of the relevant licence conditions are available on the Creative Commons website, as is the full legal code for the CC BY 3.0 AU licence.
Requests and inquiries concerning reproduction and rights should be addressed to the Director, Content and Digital Services, ACCC, GPO Box 3131, Canberra ACT 2601.
Important notice
The information in this publication is for general guidance only. It does not constitute legal or other professional advice, and should not be relied on as a statement of the law in any jurisdiction. Because it is intended only as a general guide, it may contain generalisations. You should obtain professional advice if you have any specific concern.
The ACCC has made every reasonable effort to provide current and accurate information, but it does not make any guarantees regarding the accuracy, currency or completeness of that information.
The ACCC obtains confidential proprietary data from Argus Media under licence, from which data the ACCC conducts and publishes its own calculations and forms its own opinions. Argus Media does not make or give any warranty, express or implied, as to the accuracy, currency, adequacy or completeness of its data and it shall not be liable for any loss or damage arising from any party’s reliance on, or use of, the data provided or the ACCC’s calculations.
Parties who wish to re-publish or otherwise use the information in this publication must check this information for currency and accuracy prior to publication. This should be done prior to each publication edition, as ACCC guidance and relevant transitional legislation frequently change. Any queries parties have should be addressed to the Director, Content and Digital Services, ACCC, GPO Box 3131, Canberra ACT 2601.
ACCC 12/20_20-43
www.accc.gov.au
iii Report on the Australian petroleum market—September quarter 2020
ContentsSeptember quarter 2020—Petrol snapshot 1
Key messages 2
1. Developments in the petroleum industry 121.1 Demand for petrol largely recovered across Australia except in Victoria 12
1.2 The Australian Government announced measures to boost Australia’s fuel security 13
1.3 Ampol’s Lytton refinery recommenced production in September 14
1.4 Tasmania’s fuel price transparency scheme commenced 14
1.5 The South Australian Parliament passed legislation on real-time fuel price reporting 14
1.6 The Queensland Government announced that its fuel price transparency trial had led to lower petrol prices 15
1.7 A review of the NSW biofuels mandate was completed 15
1.8 Fuel excise did not increase 16
1.9 BP and David Jones expanded their food and convenience offer 16
2. ACCC activities 172.1 ACCC and the petrol industry 17
2.2 Activities during the quarter 17
3. Retail petrol price movements in the five largest cities 193.1 Retail prices in the quarter 19
3.2 Retail prices in the year to September 2020 19
3.3 Price cycles 20
3.4 Retail prices in Brisbane were higher than the other four largest cities in aggregate 21
3.5 Petrol prices in Australia and other OECD countries 22
3.6 Retail prices of the main petrol grades 24
4. Components of petrol prices in the five largest cities 264.1 Components of petrol prices in the quarter 26
4.2 Mogas 95 prices 27
4.3 Gross indicative retail differences 28
4.4 Elements of the price change in the quarter 34
5. Retail petrol price movements in the smaller capital cities and in regional locations 365.1 Prices in the three smaller capital cities 36
5.2 Influences on regional petrol prices 37
5.3 Regional petrol prices in aggregate 37
5.4 Prices in each of the states and territories 39
6. Crude oil and refined petrol price movements 436.1 Crude oil and refined petrol price movements over the last two years 43
6.2 Influences on crude oil prices 44
6.3 Refiner margin 45
6.4 Crude oil prices in the long term 45
iv Report on the Australian petroleum market—September quarter 2020
7. Diesel and LPG prices 477.1 Diesel price movements 47
7.2 Components of diesel prices in the quarter 48
7.3 LPG price movements 48
7.4 Components of LPG prices in the quarter 49
Appendix A: Petrol price cycles and GIRDs in Sydney and Adelaide in the year to 30 September 2020 51
Appendix B: Petrol price data for monitored locations 53
Appendix C: Update on regional market studies 58
1 Report on the Australian petroleum market—September quarter 2020
September quarter 2020—Petrol snapshotAVERAGE RETAIL PETROL PRICES
WHAT MAKES UP THE RETAIL PRICE OF PETROL
GROSS INDICATIVE RETAIL DIFFERENCES
Other costs and margins (wholesale and retail)Taxes (excise and GST)International cost of refined petrol (Mogas 95)
GIRDs are the di�erence between average retail petrol prices and indicative wholesale prices in the five largest cities. They are a broad indicator of gross retail margins.
Breakdown of the average petrol price in thequarter across the five largest cities.
CITY-COUNTRY DIFFERENTIALThe di�erence between average retail petrol prices in the five largest cities and average prices in over 190 regional locations.
122.1 Retail price
103.4
93.1
Wholesale price
June qtr
Sept qtr
109.02.8
15.9
18.7122.1 cpl
PETROL
22 27.1
53.4
41.6
44
34
cpl%
13.1
1.6
1.2
10.3
Perth
Hobart
Canberra
Sydney
Darwin
Melbourne
Adelaide
Brisbane 126.115.5
119.011.2
124.1
2.2
122.77.5
118.02.0
118.912.6
125.6 15.2
121.111.1
Regional locationsFive largest cities
122.1 120.0-2.1
9.6
Five largest cities
GIRDs
Prices are shown in cents per litre (cpl). Change from previous quarter.
References to ‘petrol’ are to regular unleaded petrol (RULP) in all capital cities except Sydney, where E10 prices (RULP with up to 10% ethanol) are used.
2 Report on the Australian petroleum market—September quarter 2020
Key messages
Retail petrol prices in the five largest cities increased in the September quarterIn the September quarter 2020, average retail petrol prices across the five largest cities (Sydney, Melbourne, Brisbane, Adelaide and Perth) were 122.1 cents per litre (cpl), an increase of 13.1 cpl from the June quarter 2020 (109.0 cpl).1 Prices increased the most in Brisbane (by 15.5 cpl) and the least in Adelaide (by 11.1 cpl).
Daily average prices were more stable after record lows earlier in the yearFor most of the September quarter 2020, daily average prices in the five largest cities (on a seven-day rolling average basis) were within an 11.0 cpl band between 129.0 cpl and 118.0 cpl, as shown in the following chart.2 Daily average prices reached a high of 133.8 cpl on 5 September 2020, which was 41.4 cpl higher than the record low price in the June quarter 2020 of 92.4 cpl on 29 April 2020.
Seven-day rolling average retail petrol prices in the five largest cities: 1 October 2019 to 30 September 2020
cpl
80
90
100
110
120
130
140
150
160
170
Oct
–19
No
v–19
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–20
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
Source: ACCC calculations based on data from FUELtrac.
Note: The area to the right of the dotted vertical line in this and subsequent charts represents the September quarter 2020.
1 In this report, references to petrol are to regular unleaded petrol (RULP) unless otherwise specified. From 1 July 2014, the ACCC has used E10 prices (i.e. RULP with up to 10% ethanol) instead of RULP prices for Sydney in the average price for the five largest cities. All prices in this report are nominal prices unless otherwise specified. Real prices are prices adjusted for inflation using the Consumer Price Index.
2 A seven-day rolling average price is the average of the current day’s price and prices on the six previous days. Traditionally, the ACCC has used a seven-day rolling average to smooth out the influence of petrol price cycles in the larger cities on price movements. This has been less effective in recent years because the duration of price cycles in most of the larger cities has become substantially greater than seven days.
3 Report on the Australian petroleum market—September quarter 2020
Demand for petrol largely recovered across Australia except in VictoriaThe COVID-19 restrictions on travel and economic activity in Australia imposed in mid-March 2020 meant that there were fewer motorists purchasing fuel from retail sites in the June quarter 2020. As restrictions eased in parts of Australia in the September quarter 2020, petrol sales volumes in Australia as a whole partially recovered, as shown in following chart.
Monthly sales volumes of regular unleaded petrol in Australia: October 2019 to September 2020
300
400
500
600
700
800
900
1,000
Oct
–19
No
v–1
9
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–2
0
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
Meg
alit
res
Source: Department of Industry, Science, Energy and Resources (DISER), Australian Petroleum Statistics, issue 290, September 2020, at: https://www.energy.gov.au/publications/australian-petroleum-statistics-2020, accessed on 17 November 2020.
Petrol sales volumes across Australia decreased substantially in April 2020, and were 43% lower than monthly average sales in calendar year 2019. In September 2020, petrol sales volumes across Australia were 19% lower than monthly average sales in calendar year 2019.
In the September quarter 2020, average monthly petrol sales volumes were 17% lower than monthly average sales volumes in calendar year 2019 compared with 28% lower in the June quarter 2020.
The increase in monthly sales volumes in the September quarter 2020 was not uniform across the states and territories. Lower petrol sales volumes in Victoria in the September quarter 2020 were due to the implementation of stricter COVID-19 restrictions on travel and economic activity in that state. Monthly petrol sales volumes in Victoria in September 2020 were around 44% lower than the 2019 monthly average. In contrast, in the rest of Australia monthly average petrol sales volumes were around 6% lower than the 2019 monthly average.
Gross indicative retail differences increased in the September quarter to the highest on recordIn the September quarter 2020, average gross indicative retail differences (GIRDs) in the five largest cities were 18.7 cpl, an increase of 2.8 cpl from the previous quarter. They were the highest average quarterly GIRDs in both real (i.e. inflation adjusted) and nominal terms since the ACCC began calculating them in 2002. The previous record high was in the June quarter 2020.
GIRDs are a broad indicator of gross retail margins. They are calculated by subtracting average wholesale prices (as indicated by published terminal gate prices (TGPs)) from average retail petrol prices. TGPs are the prices at which petrol can be purchased from wholesalers in the spot market and are posted on a regular basis on the websites of the major wholesalers. Although few wholesale
4 Report on the Australian petroleum market—September quarter 2020
transactions occur at TGPs, they can be regarded as indicative wholesale prices. TGPs vary across brands and cities. TGPs reflect the wholesale price of petrol only, and exclude other retail operating costs (such as freight, branding, rent, labour and utility costs). As GIRDs include these costs, they should not be confused with actual retail profits.
GIRDs reported by the ACCC are averages across the five largest cities over time. The level of prices, costs and profits vary significantly between retail operations and not all retail petrol sites will be achieving these gross margins. Some will be achieving higher gross margins, others lower. The ACCC’s petrol market studies found that profits per retail petrol site could vary considerably between retailers, with some retail sites making substantial profits and others making very little.
GIRDs over the longer term also increased to their highest on record in both nominal and real terms GIRDs can be volatile on a quarterly basis, which can make it difficult to discern long-term movements. The following chart shows 12 month average GIRDs, in real terms, across the five largest cities, calculated at the end of each quarter over the past six years. It shows that between March 2017 and December 2019, 12 month average GIRDs across the five largest cities were within a 0.9 cpl band between 11.9 and 12.8 cpl.
Twelve month average GIRDs increased in the three subsequent quarters. In the year to September 2020 they were 16.4 cpl, an increase of 3.8 cpl from the 12 month average in the year to December 2019 (12.6 cpl). Twelve month average GIRDs increased to their highest on record in both nominal and real terms.
Twelve-month average GIRDs in the five largest cities in real terms: December 2014 to September 2020
cpl
8
9
10
11
12
13
14
15
16
17
Yea
r to
Dec
–14
Yea
r to
Mar
–15
Yea
r to
Ju
n–1
5
Yea
r to
Sep
–15
Yea
r to
Dec
–15
Yea
r to
Mar
–16
Yea
r to
Ju
n–1
6
Yea
r to
Sep
–16
Yea
r to
Dec
–16
Yea
r to
Mar
–17
Yea
r to
Ju
n–1
7
Yea
r to
Sep
–17
Yea
r to
Dec
–17
Yea
r to
Mar
–18
Yea
r to
Ju
n–1
8
Yea
r to
Sep
–18
Yea
r to
Dec
–18
Yea
r to
Mar
–19
Yea
r to
Ju
n–1
9
Yea
r to
Sep
–19
Yea
r to
Dec
–19
Yea
r to
Mar
–20
Yea
r to
Ju
n–2
0
Yea
r to
Sep
–20
Source: ACCC calculations based on data from FUELtrac, Informed Sources, Ampol, BP, Mobil, Viva Energy, WA FuelWatch, and Australian Bureau of Statistics (ABS), 6401.0 Consumer Price Index, Australia, September 2020, Tables 1 and 2. CPI: All Groups, Index Numbers and Percentage Changes, at: https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release#data-download, accessed on 17 November 2020.
Note: Real GIRDs are shown in September 2020 dollars.
The ACCC analysed financial data provided by petrol companies on retail gross profits (i.e. retail operating costs and net profits) from 2005–06 to 2017–18 to further understand the reasons for the higher GIRDs from 2014–15 onwards.3 The analysis found that both retail operating costs and net profits
3 ACCC, Financial performance of the Australian downstream petroleum industry 2002 to 2018, 22 April 2020, pp. 34–36, at: https://www.accc.gov.au/publications/petrol-industry-reports/financial-performance-of-the-australian-downstream-petroleum-industry-2002-to-2018.
5 Report on the Australian petroleum market—September quarter 2020
on RULP increased during the period, and particularly between 2013–14 and 2016–17, suggesting that higher GIRDs had been influenced by increases in both operating costs and profits.
Lower petrol demand may have continued to influence the high GIRDs in the September quarter When TGPs decrease by large amounts in a short period (which occurred earlier this year) lags between changes in TGPs and the flow through to retail prices often have the effect of increasing GIRDs. The influence of lags was likely exacerbated by the substantial reduction in demand arising from the COVID-19 restrictions, which further increased the fuel turnover time in many locations and may have meant some retailers were not passing on the full decrease in TGPs to retail prices. The influence of lags was less relevant in the September quarter 2020 because TGPs were relatively stable.
However, the effects of COVID-19 on petrol demand may have continued to contribute to the high GIRDs in the September quarter. Petrol sales volumes across Australia in the six-month period April to September 2020 were around 22% lower than in the same period last year. Petrol retailing is a high-volume low-margin business with many fixed costs (such as rent and branding). This means that when sales volumes decline, the cost per unit of petrol will increase. As a result, in order to keep revenue to partially cover their fixed costs, some retailers may be keeping retail prices higher than they otherwise would.
Furthermore, the substantial decrease in petrol demand from March 2020 has had negative implications for refineries throughout the world, including in Australia. Many refineries have reported losses and/or have been temporarily shut down. For those vertically-integrated participants in the petrol market that are involved in the refining, wholesaling and retail sectors, there may have been an incentive to attempt to partly offset losses in refining through the retail level.
Some vertically-integrated participants reported stronger retail fuel margins in the September quarter 2020.
The increase in GIRDs is reflected in the change in the shape of petrol price cycles in the five largest cities from March 2020 (when TGPs decreased sharply). In the September quarter 2020, the price cycles did not get as close to TGPs as they had previously at the trough price. In Perth, while regular weekly price cycles continued, the average price increase from the trough to the peak of the price cycle increased significantly over the last 12 months.
The following chart shows this change in prices in Melbourne (where petrol demand decreased substantially in the June and September quarters). In the September quarter 2020 average retail prices took longer to reach the trough price, and when they did, there was a larger difference between the trough price and average TGPs. The average difference between the trough price and average TGPs in Melbourne was 8.5 cpl in the September quarter 2020, compared with an average difference of 3.0 cpl in the December quarter 2019.
6 Report on the Australian petroleum market—September quarter 2020
Daily average retail petrol prices, TGPs and GIRDs in Melbourne: 1 October 2019 to 30 September 2020cp
l
GIRDsRetail prices TGPs
Oct
–19
No
v–19
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–20
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
-10
10
30
50
70
90
110
130
150
170
190
Source: ACCC calculations based on data from FUELtrac, Ampol, BP, Mobil and Viva Energy.
BP announced the closure of its refinery at Kwinana in October 2020On 30 October 2020, BP announced that it would cease fuel production at its Kwinana refinery in Western Australia and convert it to an import terminal.4
BP commented that regional oversupply and sustained low refining margins meant that the Kwinana refinery was no longer economically viable. BP explored multiple possibilities for the refinery’s future and concluded that conversion to an import terminal was the best option. BP noted that converting to an import terminal would not impact the safe and reliable supply of fuel products to Western Australia.
According to the Australian Institute of Petroleum (AIP), in 2019 the Kwinana refinery was the largest refinery in Australia with a refining capacity of 8,830 megalitres per year.5 This represented 32% of total Australian refining capacity.
Darwin had the lowest average prices in the quarter and Brisbane the highestIn the September quarter 2020, average retail petrol prices in Darwin were 118.0 cpl. They were the lowest among the eight capital cities and 4.1 cpl lower than average prices across the five largest cities. This was the sixth time in the past seven quarters when retail prices in Darwin were below those in the five largest cities.
The relatively low retail prices in Darwin may have been influenced by the opening of a second FuelXpress retail site in Palmerston in August 2019. The established FuelXpress retail site in Darwin generally had the lowest retail prices in Darwin. Another influence on Darwin’s retail prices may have been the change in price setter at Coles Express retail sites from March 2019. Motorists in Darwin may have become more aware of these changes in pricing behaviour in the Darwin market through information available from MyFuel NT.
4 BP Australia, BP to cease production at Kwinana refinery and convert to fuel import terminal, media release, 30 October 2020, at: https://www.bp.com/en_au/australia/home/media/press-releases/kwinana.html, accessed on 17 November 2020.
5 Australian Institute of Petroleum, Downstream Petroleum, April 2020, at: https://www.aip.com.au/resources/downstream-petroleum, accessed on 17 November 2020.
7 Report on the Australian petroleum market—September quarter 2020
Average retail petrol prices were the highest in Brisbane (at 126.1 cpl). Retail prices in Brisbane are generally the highest among the five largest cities. In the September quarter 2020, average retail prices in Brisbane were 5.0 cpl higher than the other four largest cities in aggregate (121.1 cpl). This was 3.0 cpl higher than the differential in the June quarter 2020 (2.0 cpl).
Movements in average petrol prices in the quarter broadly reflected changes in international refined petrol benchmark pricesRetail petrol prices in Australia are primarily determined by international refined petrol prices (which in turn are influenced by international crude oil prices) and the AUD–USD exchange rate. The relevant benchmark for Australia is the price of Singapore Mogas 95 Unleaded (Mogas 95), which is the price of refined petrol in the Asia-Pacific region.
Retail petrol prices in the five largest cities and Mogas 95 prices in Australian cents per litre moved in a broadly similar pattern during the quarter, and over the past 12 months (as shown in the following chart).
Monthly average retail petrol prices in the five largest cities and Mogas 95 prices: October 2019 to September 2020
cpl
cpl
Five largest cities (LHS) Mogas 95 (RHS)
10
20
30
40
50
60
70
80
90
80
90
100
110
120
130
140
150
160
Oct
–19
No
v–19
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–20
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
Source: ACCC calculations based on data from FUELtrac, Argus Media and the Reserve Bank of Australia (RBA).
In April 2020, monthly average Mogas 95 prices in Australian cents per litre decreased to 20.5 cpl, their lowest level since June 1999 in nominal terms, before increasing to 41.2 cpl in June 2020. Monthly average Mogas 95 prices remained around this level in the September quarter 2020.
Quarterly average Mogas 95 prices in the September quarter 2020 were 41.6 cpl, an increase of 10.3 cpl from the June quarter 2020.
8 Report on the Australian petroleum market—September quarter 2020
Taxes were again the largest component of the retail price of petrol in the quarter There are three broad components of the retail price of petrol: the international price of refined petrol, taxes (excise and GST) and other costs and margins at the wholesale and retail levels.
This was the second successive quarter when taxes accounted for a larger proportion of total petrol costs than Mogas 95 prices. The two largest components of the average retail price—Mogas 95 and taxes—accounted for around 78% of the average price of petrol in the September quarter 2020.6
The following chart shows the change in these components across the five largest cities between the June quarter 2020 and the September quarter 2020. The chart separates the other costs and margins component into two elements: other wholesale costs and margins (which includes international shipping costs and other import costs, and wholesale costs and margins), and retail costs and margins (represented by GIRDs).
Changes in the components of average retail petrol prices in the five largest cities: June quarter 2020 to September quarter 2020
53.6
Jun–20 Mogas 95 Exchange rate Other wholesalecosts and margins
Taxes GIRDs Sep–20
cpl
Mogas 95 Other wholesale costs and margins Taxes GIRDs
109.0 cpl+14.0 cpl
-3.7 cpl
+10.3 cpl
-0.9 cpl +0.9 cpl +2.8 cpl
122.1 cpl+13.1 cpl
31.331.341.6
11.0
10.1
50.8
51.7
15.9
18.7
0
20
40
60
80
100
120
140
Source: ACCC calculations based on data from FUELtrac, Argus Media, Ampol, BP, Mobil, Viva Energy, RBA and the Australian Taxation Office (ATO).
Notes: All prices are in Australian cents per litre.
The taxes component includes fuel excise and wholesale GST. The small amount of retail GST is included in GIRDs rather than in taxes, to be consistent with GIRDs reported elsewhere in this report.
The increase in the average retail price of petrol in the five largest cities by 13.1 cpl in the September quarter 2020 was driven predominantly by an increase in the price of Mogas 95 (10.3 cpl).
The AUD–USD exchange rate is a significant determinant of Australia’s retail petrol prices because international refined petrol is bought and sold in US dollars in global markets. Excluding the effect of changes in the AUD–USD exchange rate (which increased by US 6 cents in the quarter), Mogas 95 prices would have increased by 14.0 cpl in the quarter. However, the increase in the AUD–USD exchange rate offset the influence of the increase in Mogas 95 prices by 3.7 cpl in Australian cents per litre terms. The net effect of movements in Mogas 95 prices and the AUD–USD exchange rate was that Mogas 95 prices in Australian cents per litre increased by 10.3 cpl. The other main influence on retail prices in the quarter was the increase in GIRDs (2.8 cpl).
6 In this calculation taxes includes fuel excise and both wholesale and retail GST.
9 Report on the Australian petroleum market—September quarter 2020
Tasmania introduced a fuel price transparency schemeIn the September quarter 2020, the Tasmanian Government commenced its fuel price transparency scheme—FuelCheck TAS—based on the FuelCheck scheme in New South Wales.
Fuel price transparency schemes are also in place in Western Australia (FuelWatch, since 2001), New South Wales (FuelCheck, since 2016), the Northern Territory (MyFuel NT, since 2017) and Queensland (a two-year trial that began at the end of 2018).
The South Australian Parliament passed legislation in July 2020 providing for a fuel price transparency scheme in South Australia.
The ACCC has long been a supporter of fuel price transparency schemes. Real-time price information can help consumers find the lowest prices, encourages them to buy where petrol is cheapest, and rewards price-competitive retailers. For these benefits to be achieved it is essential that such schemes are comprehensive, accurate, timely and readily accessible to consumers.
Regional prices were on average lower than prices in the five largest citiesThe ACCC monitors fuel prices in all capital cities and over 190 regional locations across Australia.
In the September quarter 2020, average prices in regional locations in aggregate (regional prices) were 120.0 cpl. This was 2.1 cpl lower than average prices in the five largest cities (122.1 cpl). In the June quarter 2020, average regional prices were 7.5 cpl higher than average prices in the five largest cities.
ACCC regional market study locationsThe ACCC undertook four regional petrol market studies between 2015 and 2017. These studies examined petrol markets in Darwin, Launceston, Armidale and Cairns. Following the completion of those studies, the ACCC continues to monitor prices and developments in those locations to assess changes in competition over time.
The following table shows average retail petrol prices and GIRDs for each location, and a comparison with those in the five largest cities in aggregate, in the September quarter 2020.
Quarterly average retail petrol prices and GIRDs in Darwin, Launceston, Armidale, Cairns and the five largest cities—September quarter 2020—cpl
Darwin Launceston Armidale CairnsFive largest
cities
Retail prices
Average price: September quarter 2020 118.0 126.9 118.5 120.0 122.1Change from June quarter 2020 2.0 1.5 3.0 3.8 13.1Difference from five largest cities: September quarter 2020
-4.1 4.8 -3.6 -2.1 -
Change from June quarter 2020 -11.1 -11.6 -10.1 -9.3 -GIRDsAverage GIRDs: September quarter 2020 9.8 18.6 14.1 13.8 18.7Change from June quarter 2020 -9.6 -8.1 -6.8 -5.9 2.8Difference from five largest cities: September quarter 2020
-8.9 -0.1 -4.6 -4.9 -
Change from June quarter 2020 -12.4 -10.9 -9.6 -8.7 -
Source: ACCC calculations based on data from FUELtrac, Ampol, BP, Mobil, Viva Energy and WA FuelWatch.
Notes: All prices are for RULP except Armidale (which is E10).
Hobart TGPs are used as a proxy for TGPs in Launceston.
Sydney and Brisbane E10 TGPs are used as a proxy for Armidale TGPs.
10 Report on the Australian petroleum market—September quarter 2020
The ACCC compares actual retail prices in these locations with estimated retail prices calculated on a long-term competitive cost basis. This calculation reflects the fact that costs (such as freight and operating costs on a per litre basis) are higher in these locations, and assumes that retail margins in these locations should be broadly similar to long-term average retail margins in the five largest cities.
This long-term competitive cost-based price provides a benchmark against which to compare current price levels. It is not static and will change as its underlying elements change over time. If retail prices are constantly above this benchmark price for a sustained period, this may be indicative of a less-competitive market in which retailers are earning higher margins at the expense of consumers.
Darwin petrol prices remained below a long-term competitive cost-based priceAs noted earlier, the average price in Darwin in the September quarter 2020 was 4.1 cpl lower than prices in the five largest cities. In the September quarter 2020, average petrol prices in Darwin remained below a long-term competitive cost-based price.
Motorists can use the MyFuel NT website and app to identify the highest and lowest priced retail sites in Darwin. For example, on 12 November 2020, it showed that there was a range of 19.0 cpl between the highest priced retail site in Darwin (117.9 cpl at a BP site) and the lowest (98.9 at a United and a BP site).
Launceston petrol prices remained substantially above a long-term competitive cost-based priceThe average petrol price in Launceston in the September quarter 2020 was 126.9 cpl, which was 4.8 cpl higher than prices in the five largest cities. Launceston petrol prices remained substantially above a long-term competitive cost-based price in the September quarter 2020.
Motorists in Launceston can use the new FuelCheck TAS website and app to identify the highest and lowest priced retail sites. For example, on 12 November 2020, it showed that there was a 15.0 cpl range between the highest priced retail sites in Launceston (124.9 cpl at Caltex, Woolworths, Coles Express and BP sites) and the lowest (109.9 cpl at an independent site, Tas Petroleum Launceston).
Armidale petrol prices were above a long-term competitive cost-based price The average petrol price in Armidale in the September quarter 2020 was 118.5 cpl, which was 3.6 cpl lower than prices in the five largest cities. Petrol prices in Armidale were above a long-term competitive cost-based price in the September quarter 2020.
Motorists in Armidale can use the FuelCheck website and app to identify the highest and lowest priced retail sites. For example, on 12 November 2020, the FuelCheck website showed that there was a 4.9 cpl range between the highest priced RULP retail site in Armidale (115.9 cpl at Caltex Armidale) and the lowest (111.0 cpl at Beardy Street Servo). There was a 1.0 cpl range between the highest priced E10 retail site (114.9 cpl at a Coles Express site) and the lowest (113.9 cpl at Lowes, Woolworths and Caltex sites).
Cairns petrol prices remained above a long-term competitive cost-based priceThe average petrol price in Cairns in the June quarter 2020 was 120.0 cpl, which was 2.1 cpl lower than the five largest cities. Petrol prices in Cairns remained above a long-term competitive cost-based price in the September quarter 2020.
Motorists in Cairns are able to access site-specific petrol price data made available by websites and app providers under the Queensland fuel price reporting trial to identify the highest and lowest priced retail sites. For example, on 12 November 2020, using the PetrolSpy website, there was an 11.2 cpl range
11 Report on the Australian petroleum market—September quarter 2020
between the highest priced retail sites in Cairns (119.9 cpl at Coles Express, Mobil, BP and Caltex sites) and the lowest (108.7 cpl at United, Liberty and Puma sites).
Diesel and LPG prices decreased marginally in the quarterIn the September quarter 2020, diesel and liquefied petroleum gas (LPG) prices in the five largest cities both decreased:7
� average retail diesel prices were 120.2 cpl in the quarter, a decrease of 1.9 cpl from the June quarter 2020 (122.1 cpl)
� average retail LPG prices in the quarter 2020 were 76.9 cpl, a decrease of 1.7 cpl from the June quarter 2020 (78.6 cpl).
7 References to LPG in this report refer to automotive LPG.
12 Report on the Australian petroleum market—September quarter 2020
1. Developments in the petroleum industry
1.1 Demand for petrol largely recovered across Australia except in Victoria
The COVID-19 restrictions on travel and economic activity in Australia imposed in mid-March 2020 meant that there were fewer motorists purchasing fuel from retail sites in the June quarter 2020. As restrictions in parts of Australia eased in the September quarter 2020, petrol sales volumes in Australia as a whole partially recovered, as shown in chart 1.1.
Chart 1.1: Monthly sales volumes of regular unleaded petrol in Australia: October 2019 to September 2020
300
400
500
600
700
800
900
1,000
Oct
–19
No
v–1
9
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–2
0
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
Meg
alit
res
Source: DISER, Australian Petroleum Statistics, issue 290, September 2020, at: https://www.energy.gov.au/publications/australian-petroleum-statistics-2020, accessed on 17 November 2020.
Petrol sales volumes across Australia decreased substantially in April 2020, and were 43% lower than monthly average sales in calendar year 2019. In September 2020, petrol sales volumes across Australia were 19% lower than monthly average sales in calendar year 2019.
In the September quarter 2020, average monthly petrol sales volumes were 17% lower than monthly average sales volumes in calendar year 2019 compared with 28% lower in the June quarter 2020.
The increase in monthly sales volumes in the September quarter 2020 was not uniform across the states and territories. Lower petrol sales volumes in Victoria in the September quarter 2020 were due to the implementation of stricter COVID-19 restrictions on travel and economic activity in that state.
Chart 1.2 shows monthly petrol sales volumes in Victoria compared with the rest of Australia over the previous 12 months. Monthly petrol sales volumes in Victoria in August and September 2020 were around 49% and 44% lower respectively than the 2019 monthly average. In contrast, monthly average petrol sales volumes across the rest of Australia were around 5% and 6% lower respectively than the 2019 monthly average.
13 Report on the Australian petroleum market—September quarter 2020
Chart 1.2: Monthly sales volumes of regular unleaded petrol in Victoria and Australia (not including Victoria): October 2019 to September 2020
0
100
200
300
400
500
600
700
Oct
–19
No
v–1
9
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–2
0
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
Meg
alit
res
Victoria Australia (not including Victoria)
Source: DISER, Australian Petroleum Statistics, issue 290, September 2020, at: https://www.energy.gov.au/publications/australian-petroleum-statistics-2020, accessed on 17 November 2020.
1.2 The Australian Government announced measures to boost Australia’s fuel security
On 14 September 2020, the Prime Minister, the Hon Scott Morrison MP, and the Minister for Energy and Emissions Reduction, the Hon Angus Taylor MP, jointly announced measures to enhance Australia’s fuel security.8 These will be delivered through a combined market and regulatory framework, with three key elements:
� investing $200 million in a competitive grants program to build an additional 780 megalitres of onshore diesel storage
� creating a minimum stockholding obligation for key transport fuels
� backing the refining sector by entering into a detailed market design process for a refinery production payment.
The fuel security proposals have a number of stated objectives including: contributing to the security of fuel supply, keeping prices low for consumers and supporting local industry and employment. The government will work with industry over the next six months on the legislative and regulatory design of the package.
Additional measures will also be introduced to reduce the burden on industry and improve fuel market information. These include modernising the online fuel reporting system to make it easier for industry to report stock levels to government and improve the timeliness of data.
8 Prime Minister of Australia, The Hon Scott Morrison MP, and Minister for Energy and Emissions Reduction, the Hon Angus Taylor MP, Boosting Australia’s Fuel Security, media release, 14 September 2020, at: https://www.pm.gov.au/media/boosting-australias-fuel-security, accessed on 17 November 2020.
14 Report on the Australian petroleum market—September quarter 2020
1.3 Ampol’s Lytton refinery recommenced production in September
On 6 April 2020, noting that global fuel demand erosion caused by COVID-19 was expected to impact refining conditions for a number of months, Ampol announced that it would bring forward to May 2020 the planned shutdown of the Lytton refinery in Brisbane for turnaround and inspection maintenance activities.9
On 11 August 2020, Ampol advised that it intended to restart its Lytton refinery at the conclusion of the extended outage period.10 The maintenance activities were due to be completed at the end of August, with the phased restart of the refinery units expected throughout September. Ampol expected the refinery to be able to produce at full production by the beginning of October 2020.
1.4 Tasmania’s fuel price transparency scheme commenced
On 18 September 2020, the Tasmanian Government commenced its fuel price transparency scheme, FuelCheck TAS. Fuel retailers are required to update fuel prices in real time.11
The scheme has been established through a Code of Practice under the Australian Consumer Law (Tasmania) Act 2010. FuelCheck TAS is accessible via a website and a free app for motorists to search for fuel by location, price, type and brand.
FuelCheck TAS is similar to the NSW FuelCheck scheme. ITnews reported on 25 September 2020 that the NSW Customer Service Minister, Victor Dominello, said that the Tasmanian Government had entered a “fee for service” partnership with NSW to roll out the technology.12 Mr Dominello also extended the offer to Victoria and the ACT, which (apart from South Australia) are the only jurisdictions without a fuel price transparency scheme in operation.
1.5 The South Australian Parliament passed legislation on real-time fuel price reporting
On 23 July 2020, the Parliament of South Australia passed legislation that would mandate petrol stations operating in the state to disclose their prices to a central database within half an hour of them changing.13 The South Australian Attorney General, Vickie Chapman MP, stated that the South Australian Government will go out to tender to find a data aggregator. The data will be made available for free to private app developers, as is the case in Queensland.
9 Caltex Australia, Lytton Refinery T&I Decision, Trading update and details of business and capital initiatives, ASX release, 6 April 2020, at: https://wcsecure.weblink.com.au/pdf/CTX/02222354.pdf, accessed on 17 November 2020.
10 Ampol Limited, Lytton refinery to restart during September, ASX release, 11 August 2020, at: https://wcsecure.weblink.com.au/pdf/ALD/02265177.pdf, accessed on 17 November 2020.
11 Elise Archer, Tasmanian Minister for Building and Construction, Putting downward pressure on fuel prices in Tasmania, media release, 18 September 2020, at: https://elisearcher.com.au/putting-downward-pressure-on-fuel-prices-in-tasmania/, accessed on 17 November 2020.
12 iTnews, Tasmania adopts NSW govt’s FuelCheck price comparison app, 25 September 2020, at: https://www.itnews.com.au/news/tasmania-adopts-nsw-govts-fuelcheck-price-comparison-app-553883, accessed on 17 November 2020.
13 Vickie Chapman MP, SA Attorney General, South Australians one-step closer to real time fuel prices, media release, 23 July 2020, at: https://www.premier.sa.gov.au/news/media-releases/news/south-australians-one-step-closer-to-real-time-fuel-prices#:~:text=The%20Marshall%20Liberal%20Government’s%20plan,an%20hour%20of%20them%20changing, accessed on 17 November 2020.
15 Report on the Australian petroleum market—September quarter 2020
1.6 The Queensland Government announced that its fuel price transparency trial had led to lower petrol prices
On 17 August 2020, The Queensland Minister for Natural Resources, Mines and Energy, the Honourable Dr Anthony Lynham, announced that research conducted by Griffith University showed that Queensland’s fuel price reporting trial, which commenced in December 2018, had helped drive down average fuel prices in South East Queensland.14
The Griffith University report found that the fuel price transparency scheme had led to a small decline in the average price of all grades of petrol in South East Queensland. The reduction in average petrol prices meant $10 million in savings for Brisbane motorists, and $14 million in savings for motorists across South East Queensland.
The report also found that in the first year of the scheme’s operation, motorists who shopped around could have saved over the course of the year up to $179 in Brisbane, $139 in the Gold Coast and Ipswich, $81 in Rockhampton, $66 in Mount Isa and around $54 in Cairns.
The Queensland Government stated that motorists were checking petrol prices on comparison apps and websites more than 600,000 times per month, compared with less than 350,000 per month in 2018.
Queensland’s two-year fuel price reporting trial concludes in December 2020. Griffith University is expected to deliver a final report on the trial in 2021.
1.7 A review of the NSW biofuels mandate was completed
On 1 October 2019, the NSW Government commenced a review of the biofuels arrangements in NSW that require certain fuel retailers to sell a minimum percentage of biofuels.15 The bioethanol mandate in NSW is currently 6%, and the biodiesel mandate is 2%.
The arrangements are outlined in the Biofuels Act 2007 and the Biofuels Regulation (No 2) 2016. The primary objective of the Biofuels Act is to support the development of a sustainable and competitive biofuels industry in NSW. The NSW Government reviewed the Biofuels Act and Regulation to ensure that their objectives are still valid, and their requirements are still appropriate.
The outcome of the review was due to be tabled in both Houses of Parliament by 30 June 2020. However, the COVID-19 pandemic and disruptions in the Parliamentary schedule delayed this timetable and the report was tabled on 6 August 2020.16
For a volume fuel retailer to meet the 6% ethanol mandate, at least 60% of petrol sold would need to be E10. The review found that in 2018–19 only 25% of fuel sales were E10. It concluded that reasons for this include low price differentials between several types of fuel, and customer concerns about ethanol blends.
The review concluded that the regulatory framework and objectives of the Act continue to be largely appropriate. As a result, the recommendations were mostly structural and designed to reduce regulatory burden and improve the regulatory regime. A key recommendation was the creation of a new awareness campaign to promote greater consumer awareness of the benefits of ethanol-blended fuel.
14 Queensland Minister for Natural Resources, Mines and Energy, The Honourable Dr Anthony Lynham, Queensland drivers turn to smart tech to beat fuel price rip-offs, media release, 17 August 2020 at: https://statements.qld.gov.au/statements/90439, accessed on 17 November 2020.
15 NSW Government—Fair Trading, Review of the Biofuels Act, at: https://www.fairtrading.nsw.gov.au/consultation-tool/biofuels-act-review , accessed on 17 November 2020.
16 NSW Department of Customer Service, Statutory Review—Biofuels Act 2007, August 2020, at: https://www.parliament.nsw.gov.au/la/papers/Pages/tabled-paper-details.aspx?pk=77909&houseCode=la, accessed on 17 November 2020.
16 Report on the Australian petroleum market—September quarter 2020
1.8 Fuel excise did not increaseThe Australian Government announced in the 2014–15 Budget that it would reintroduce biannual indexation, by the Consumer Price Index (CPI), of excise and excise-equivalent customs duty for all fuels except aviation fuels.17 Under these arrangements, which took effect from 10 November 2014, excise is generally increased on 1 February and 1 August each year.
Indexation occurred on 3 August 2020. The CPI indexation factor for rates from 3 August 2020 is 0.9850. As the factor is less than one, the rates did not change. Excise on petrol and diesel remained at 42.3 cpl. Excise on automotive LPG remained at 13.8 cpl.18
1.9 BP and David Jones expanded their food and convenience offer
On 30 July 2020, BP and David Jones announced the expansion of their offer to deliver fresh, high-quality products and innovative convenience, and shape the way Australian consumers shop for food.19 The expansion will include 21 new stores to be opened by the end of 2020 in Sydney (14 stores) and Melbourne (seven stores) taking the total to 31 dual-branded sites in Australia. All partner sites will also have a select range of the David Jones Food offering available to order on Uber Eats.
17 Automatic twice-yearly indexation of excise on petrol commenced in 1983–84 and ceased in March 2001.
18 Australian Taxation Office, Excise rates for fuel, at: https://www.ato.gov.au/Business/Excise-on-fuel-and-petroleum-products/Lodging,-paying-and-rates---excisable-fuel/Excise-duty-rates-for-fuel-and-petroleum-products/, accessed on 17 November 2020.
19 BP Australia, BP and David Jones expand market-leading food and convenience offer with 21 additional stores by year end, media release, 30 July 2020, at: https://www.bp.com/en_au/australia/home/media/press-releases/bp-david-jones-21-new-stores.html, accessed on 17 November 2020.
17 Report on the Australian petroleum market—September quarter 2020
2. ACCC activities
2.1 ACCC and the petrol industryThe main role of the ACCC is to enforce the Competition and Consumer Act 2010 (the Act) across the Australian economy, including the fuel industry. The ACCC’s activities under the Act include enforcement and compliance, mergers and acquisitions assessments, authorisations and notifications, and administration of the Oil Code.20
Wholesale and retail petrol prices in Australia are determined by market forces. The ACCC does not set prices in petrol markets and does not have the powers to do so. In the absence of conduct that is in breach of the Act, high petrol prices are not illegal.
The ACCC’s petrol monitoring role is to assist consumers to navigate this complex industry. Through its petrol monitoring reports, industry reports and other information channels, the ACCC promotes transparency in the Australian petroleum industry and improved public awareness of the factors that determine retail petrol prices.
2.2 Activities during the quarter2.2.1 AIP application for authorisation to enable oil companies to
co-operate to secure fuel supply during the COVID-19 pandemic ACCC authorisation provides statutory protection from court action for conduct that might otherwise raise concerns under the competition provisions of the Act. The ACCC may grant authorisation when it is satisfied that the likely public benefit from the conduct outweighs any likely public detriment.
On 2 April 2020, the AIP lodged an application for authorisation on behalf of its current members, and any parties approved by the ACCC (collectively, the Participating Entities), to co-operate to improve the security of supply of fuel products and facilitate the efficient use of refining capacity and fuel storage capacity during the COVID-19 pandemic. On 3 April 2020, the ACCC granted urgent interim authorisation, subject to certain conditions, to allow the Participating Entities to engage in the conduct while the ACCC considered their substantive application.
Following receipt of further information from the AIP, on 20 May 2020, the ACCC revoked the initial interim authorisation and replaced it with an interim authorisation that more closely reflected how the Participating Entities proposed to co-operate. The revised interim authorisation was granted subject to three conditions:
� the AIP must provide specified information to the ACCC about the details of conduct engaged in under the authorisation
� the AIP or the Participating Entities must provide further information to the ACCC about the conduct engaged in, if requested by the ACCC
� any party that wishes to engage in the conduct in the future must seek the approval of the ACCC.
The revised interim authorisation:
� only extended to the Participating Entities having discussions and entering into arrangements at meetings of the AIP Board or a committee convened by the AIP Board
� did not allow fuel companies to coordinate prices or to exchange commercially or competitively sensitive information relating to marketing or sales activities.
20 The Oil Code is a prescribed mandatory industry code of conduct, the purpose of which is to regulate the conduct of suppliers, distributors and retailers in the downstream petroleum industry.
18 Report on the Australian petroleum market—September quarter 2020
On 23 July 2020, the ACCC issued a draft determination proposing to grant authorisation on the same terms, and subject to the same conditions, as the 20 May 2020 interim authorisation.
On 10 September 2020, after seeking feedback from interested parties about the draft determination, final authorisation was granted on the same terms and subject to the same conditions. The authorisation came into force on 2 October 2020, replacing the interim authorisation that was in place, and expires on 31 March 2021.21
In granting authorisation the ACCC considered that allowing fuel companies to collectively identify logistical challenges and any actual or potential supply shortages, and to coordinate a response in a timely manner would support the fuel sector to minimise any material disruption of supply to Australian businesses and consumers. While there are some risks the conduct may reduce competition, the limited scope and duration of the authorisation, and the reporting conditions, mean the risk is low. Overall, the ACCC concluded that the benefits of allowing parties to work together to improve the supply of fuel products to Australian businesses and consumers would outweigh any potential detriments.
2.2.2 Stakeholder engagement and communications activityIn the September quarter 2020, the ACCC responded to fuel-related media enquiries on retail fuel prices, petrol price cycles, fuel price information and competition issues. Responses were prepared for Ministerial correspondence on fuel-related matters, with issues including: high fuel prices; retail fuel price differentials between regional locations and larger capital cities, and between locations within a wider region; and petrol price cycle movements in capital cities.
In the September quarter 2020, the fuel-related pages on the ACCC website received 131,323 page views, an increase of 7,960 page views (around 7%) from the previous quarter. Of this total, the petrol price cycles web page received 116,928 page views, an increase of 12,503 (around 12%) from the previous quarter. This was the most viewed page on the ACCC website in the September quarter 2020.
21 See: https://www.accc.gov.au/public-registers/authorisations-and-notifications-registers/authorisations-register/australian-institute-of-petroleum.
19 Report on the Australian petroleum market—September quarter 2020
3. Retail petrol price movements in the five largest cities
This chapter focusses on petrol prices in the five largest cities (Sydney, Melbourne, Brisbane, Adelaide and Perth). Petrol prices in the smaller capital cities (Canberra, Hobart and Darwin) and regional locations across Australia are analysed in chapter 5.
3.1 Retail prices in the quarterAverage retail petrol prices across the five largest cities in the September quarter 2020 were 122.1 cpl, an increase of 13.1 cpl from the June quarter 2020 (109.0 cpl).
Table 3.1 shows quarterly average retail prices for the September quarter 2020, the June quarter 2020 and the change, in each of the five largest cities.
Table 3.1: Quarterly average retail petrol prices in each of the five largest cities: June quarter 2020 and September quarter 2020–cpl
Quarter Sydney Melbourne Brisbane Adelaide Perth Five largest cities
Jun–20 107.8 110.4 110.6 110.0 106.3 109.0
Sep–20 119.0 125.6 126.1 121.1 118.9 122.1
Change 11.2 15.2 15.5 11.1 12.6 13.1
Source: ACCC calculations based on FUELtrac data.
Table 3.1 shows that in the September quarter 2020:
� Brisbane’s average retail prices were the highest (126.1 cpl). They were also the highest in the June quarter 2020.
� Perth’s average retail prices were the lowest (118.9 cpl). They were also the lowest in the June quarter 2020.
� Prices increased the most in Brisbane (by 15.5 cpl) and the least in Adelaide (11.1 cpl).
3.2 Retail prices in the year to September 2020Chart 3.1 shows that seven-day rolling average retail petrol prices in the five largest cities in the year to September 2020 were very volatile, ranging from a high of 159.1 cpl on 18 and 19 December 2019 to a low of 92.4 cpl on 29 April 2020.22
22 Seven-day rolling average retail petrol prices in each of the five largest cities between 1 October 2019 and 30 September 2020 are provided in chapter 5.
20 Report on the Australian petroleum market—September quarter 2020
Chart 3.1: Seven-day rolling average retail petrol prices in the five largest cities: 1 October 2019 to 30 September 2020
cpl
80
90
100
110
120
130
140
150
160
170O
ct–1
9
No
v–19
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–20
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
Source: ACCC calculations based on data from FUELtrac.
Note: A seven-day rolling average price is the average of the current day’s price and prices on the six previous days. Traditionally, the ACCC has used a seven-day rolling average to smooth out the influence of petrol price cycles in the larger cities on price movements. This has been less effective in recent years because the duration of price cycles in most of the larger cities has become substantially greater than seven days.
Between October 2019 and mid-February 2020, seven-day rolling average retail petrol prices ranged between around 160 cpl and 135 cpl. In the subsequent two and half months, prices decreased sharply reaching a low of 92.4 on 29 April 2020. The last time seven-day rolling average prices were at this level was on 9 January 2005 (92.2 cpl).23 Prices subsequently increased, ending the June quarter 2020 at 119.3 cpl.
For most of the September quarter 2020, seven-day rolling average retail petrol prices were within an 11.0 cpl band between 129.0 cpl and 118.0 cpl. Daily average prices reached a high of 133.8 cpl on 5 September 2020 (41.4 cpl higher than the record low price on 29 April 2020). They subsequently decreased and finished the quarter at 114.7 cpl.
3.3 Price cyclesPrice cycles (i.e. the sudden, sharp increases in the price of petrol, followed by a gradual decline) are a prominent and longstanding feature of retail petrol prices in Australia’s five largest cities. These price cycles do not occur in the smaller capital cities or in most regional locations. Price cycles are the result of pricing decisions made by petrol retailers aiming to maximise profits. They only occur at the retail level; wholesale prices do not exhibit similar cyclical movements.
Table 3.2 shows that over the year to September 2020, the number of price cycles varied in the five largest cities.
23 In real terms, they were the lowest recorded since the ACCC’s predecessor, the Prices Surveillance Authority (PSA), began collecting comprehensive retail prices in all five cities in May 1991.
21 Report on the Australian petroleum market—September quarter 2020
Table 3.2: Number of price cycles per quarter in the five largest cities: December quarter 2019 to September quarter 2020
Quarter Sydney Melbourne Brisbane Adelaide Perth
Dec-19 4 3 4 5 13
March-20 3 3 3 5 13
June-20 2 2 2 7 13
Sep-20 2 2 3 7 14
Year to Sep-20 11 10 12 24 53
Source: ACCC calculations based on data from FUELtrac.
Notes: A price cycle is considered to have occurred in a quarter if the peak of a price cycle occurs in that quarter.
Perth had a price cycle once a week. There were 14 cycles recorded in the September quarter 2020.
In the September quarter 2020, Brisbane and Perth each had one additional price cycle compared with the June quarter 2020. The number of price cycles remained unchanged in Sydney, Melbourne and Adelaide.
Perth had the most price cycles in the September quarter 2020, with price cycles occurring on a weekly basis (as they have done since 2011). In the past, these cycles have been highly predictable for motorists, with the lowest price occurring on a Monday and the highest price occurring on a Tuesday. However, during the March quarter 2020 this changed with the lowest price occurring on a Tuesday and the highest price occurring on a Wednesday. This change continued in the June quarter 2020 and the September quarter 2020. The consistency of price cycles in Perth may have been influenced by the WA FuelWatch scheme, which has been in operation since 2001.
The ACCC released a report on petrol price cycles in Australia in December 2018. The report noted that while motorists find price cycles frustrating, they could use price cycles to their advantage to make substantial savings across the year.24
The impact of the COVID-19 situation on retail petrol prices has led to some changes in the pattern of price cycles. These are discussed in chapter 4 and in appendix A.
3.4 Retail prices in Brisbane were higher than the other four largest cities in aggregate
Retail prices in Brisbane are generally the highest among the five largest cities. As noted in section 3.1, in the September quarter 2020 average retail prices in Brisbane were again the highest.
Chart 3.2 shows quarterly average retail prices in Brisbane and average prices across the other four largest cities (Sydney, Melbourne, Adelaide and Perth) over the two years to September 2020. Over this period, Brisbane retail prices were on average 2.8 cpl higher than the average across the other four largest cities, ranging from a low of 0.9 cpl in the December quarter 2018 to a high of 5.0 cpl in the September quarter 2020.
24 ACCC, Petrol price cycles in Australia, December 2018, at: https://www.accc.gov.au/publications/petrol-industry-reports/petrol-price-cycles-in-australia.
22 Report on the Australian petroleum market—September quarter 2020
Chart 3.2: Quarterly average retail prices in Brisbane and the other four largest cities: December quarter 2018 to September quarter 2020
cpl
100
110
120
130
140
150
160D
ec–1
8
Mar
–19
Jun
–19
Sep
–19
Dec
–19
Mar
–20
Jun
–20
Sep
–20
Brisbane Other four largest cities
Source: ACCC calculations based on data from FUELtrac.
In the September quarter 2020, average retail prices in Brisbane (126.1 cpl) were 5.0 cpl higher than the other four largest cities in aggregate (121.1 cpl). This was 3.0 cpl higher than the differential in the June quarter 2020 (2.0 cpl).
In the year to September 2020, Brisbane retail prices were on average 3.6 cpl higher than the average across the other four largest cities. This was higher than the differential in the year to June 2020 (2.8 cpl).
The ACCC released its report on the Brisbane petrol market in October 2017.25 It noted that petrol prices in Brisbane had been significantly higher than those in the other four largest cities in the period 2009–10 to 2016–17. Over those eight years, Brisbane motorists paid on average 3.3 cpl more for petrol than motorists in the other four largest cities.
The report found that the main factor influencing the higher prices in Brisbane was higher retail margins on petrol, which contributed to profits in Brisbane being significantly higher than the average across Australia. It also found that, compared with Sydney, retail pricing was less competitive in Brisbane, with retailers setting prices higher at the top and bottom of the price cycle than retailers in Sydney. Furthermore, Brisbane had fewer retail chains that were effective and vigorous price competitors. Brisbane had only four retailers in this category (7-Eleven, Woolworths, Puma Energy and United), while Sydney had seven (Speedway, Metro, Budget, Westside, United, 7-Eleven and Woolworths).
3.5 Petrol prices in Australia and other OECD countriesCompared with other developed countries, Australia’s retail petrol prices are relatively low. Chart 3.3 shows average retail PULP 95 prices—both including and excluding taxes—among 33 countries in the Organisation for Economic Co-operation and Development (OECD) in the June quarter 2020 (the latest data available).
However, a degree of caution needs to be exercised when comparing international petrol prices, because fuel quality standards and taxation rates differ among countries, as does the availability and use of fuel types.
25 ACCC, Report on the Brisbane petrol market, October 2017, at: https://www.accc.gov.au/publications/petrol-market-studies/report-on-the-brisbane-petrol-market.
23 Report on the Australian petroleum market—September quarter 2020
Chart 3.3: Average retail PULP 95 prices and taxes in OECD countries: Australian cents per litre, June quarter 2020
Australian cpl Price less tax Tax component Average price less tax
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 210 220 230 240 250 260
United States
Canada
Australia
Turkey
Chile
Poland
Hungary
Czech Republic
Luxembourg
Slovenia
Lithuania
Latvia
Austria
Spain
Slovak Republic
New Zealand
Estonia
Korea
United Kingdom
Ireland
Germany
Belgium
Sweden
France
Norway
Portugal
Switzerland
Finland
Israel
Greece
Denmark
Italy
Netherlands
Source: DISER, Australian Petroleum Statistics, issue 290, September 2020 at: https://www.energy.gov.au/publications/australian-petroleum-statistics-2020, accessed on 17 November 2020.
Note: All international prices shown are for PULP 95 RON, except for New Zealand (96 RON).
The chart shows that, among OECD countries, Australia had the third-lowest retail PULP 95 prices. However, the main reason for the lower retail petrol prices in Australia is the relatively low rate of taxation on fuel. In the June quarter 2020, taxes made up around 43% of the retail PULP 95 price in Australia. This is much lower than in many OECD countries—the average tax component on PULP 95 prices in the OECD was around 64% in the June quarter 2020. Excluding taxes, PULP 95 prices in Australia were the equal tenth-highest of OECD countries.
Chart 3.4 shows average retail RULP prices—both including and excluding taxes—among eight OECD countries in the June quarter 2020. In the majority of OECD countries other than Australia, RULP is not sold in significant quantities. The chart shows that Australia had the third-lowest retail RULP prices among these countries. Excluding taxes, RULP prices in Australia were the fifth-highest of OECD countries.
24 Report on the Australian petroleum market—September quarter 2020
Chart 3.4: Average retail RULP prices and taxes in OECD countries: Australian cents per litre, June quarter 2020
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190
Australian cpl
Price less tax Tax component Average price less tax
United States
Canada
Australia
Chile
Korea
New Zealand
Austria
Japan
Source: DISER, Australian Petroleum Statistics, issue 290, September 2020 at: https://www.energy.gov.au/publications/australian-petroleum-statistics-2020, accessed on 17 November 2020.
3.6 Retail prices of the main petrol gradesChart 3.5 shows that retail prices of the main grades of unleaded petrol—RULP, premium unleaded petrol (PULP) 95, PULP 98, and E10—all moved in a similar manner over the year to September 2020.26
Chart 3.5: Monthly average retail prices of RULP, PULP 95, PULP 98 and E10 in the five largest cities: October 2019 to September 2020
cpl
RULP PULP 95 PULP 98 E10
85
95
105
115
125
135
145
155
165
175
185
Oct
–19
No
v–19
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–20
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
Source: ACCC calculations based on data from FUELtrac.
26 E10 prices are for Sydney and Brisbane only. RULP prices in Sydney are used in this section to calculate average RULP prices in the five largest cities.
25 Report on the Australian petroleum market—September quarter 2020
In the September quarter 2020, the average differential in the five largest cities between:
� RULP and PULP 95 prices was 14.6 cpl (an increase of 0.2 cpl from the previous quarter)
� RULP and PULP 98 prices was 22.2 cpl (an increase of 0.1 cpl)
� E10 and RULP was 0.9 cpl (a decrease 0.1 cpl).
Retail prices of the main grades of petrol move in a similar manner because they are all influenced by international refined petrol benchmark prices (which, in turn, predominantly move in line with changes in the international price of crude oil).
The ACCC noted in its recent industry report on the financial performance of the downstream petroleum industry that over a longer period PULP 95 and PULP 98 have become more expensive relative to the retail price of RULP, and that PULP was significantly more profitable than other petrol products.27
Between 2009–10 and 2019–20, the annual average price differential in real terms between RULP and PULP 95 increased from 11.3 cpl to 14.3 cpl, an increase of 3.0 cpl. The annual average price differential between RULP and PULP 98 similarly increased from 17.2 cpl to 22.5 cpl, an increase of 5.3 cpl.
Higher average prices for PULP, relative to RULP, can be influenced by a variety of factors, including adjustments to specific international benchmarks and potentially changes in the quality of PULP products. However, the increases in PULP prices in recent years may be translating, at least in part, to higher profits on PULP.
27 ACCC, Financial performance of the Australian downstream petroleum industry 2002 to 2018, 22 April 2020, pp. 3–4.
26 Report on the Australian petroleum market—September quarter 2020
4. Components of petrol prices in the five largest cities
There are three broad components of the retail price of petrol:
� the international price of refined petrol (Mogas 95)
� taxes (excise and GST)
� other costs and margins, at both the wholesale and retail level.
This chapter analyses the components of retail petrol prices in the September quarter 2020 and how they have changed over time.
4.1 Components of petrol prices in the quarterChart 4.1 shows the components of the average retail petrol price in the five largest cities in the September quarter 2020.28
Chart 4.1: Components of the average retail petrol price in the five largest cities in the September quarter 2020
Other costs and marginsTaxesMogas 95
122.1 cpl
PETROL
27.122
44
34
53.4
41.6
cpl%
Source: ACCC calculations based on data from FUELtrac, Argus Media and RBA.
The chart shows that the two largest components of the pump price—Mogas 95 and taxes—accounted for 78% of the average price of petrol in the September quarter 2020 (an increase of 1 percentage point from the June quarter 2020). These components are largely outside the control of the local petrol retailers.
In the September quarter 2020, as a proportion of the average price:
� Mogas 95 increased by 5 percentage points, from 29% in the June quarter 2020
� taxes decreased by 4 percentage points, from 48% in the June quarter 2020
� other costs and margins decreased by 1 percentage point, from 23% in the June quarter 2020.
As in the June quarter 2020, taxes accounted for a larger proportion of the retail price of petrol than the cost of Mogas 95.
28 Taxes include fuel excise, and both the wholesale and retail components of GST.
27 Report on the Australian petroleum market—September quarter 2020
4.2 Mogas 95 pricesAs Australia’s local refining capacity cannot produce all of Australia’s fuel needs, refined petrol is imported to Australia from international markets. The relevant international benchmark price for petrol in Australia is the price of refined petrol in the Asia-Pacific region. For RULP, it is Singapore Mogas 95 Unleaded (Mogas 95). This benchmark is used for pricing petrol in Australia due to Australia’s proximity to Singapore, which is one of the world’s most important trading and refining centres.
The price of Mogas 95 is linked to the price of crude oil as crude oil is the major input into the production of refined petrol. Crude oil is an internationally traded commodity and its price is determined by global demand and supply factors. Therefore, when the world price of crude oil changes it generally flows through into the price of refined petrol and then into retail petrol prices in Australia. More details on movements in international crude oil and Mogas 95 prices are provided in chapter 6.
Chart 4.2 shows monthly average Mogas 95 prices in Australian cents per litre terms, and monthly average retail petrol prices in the five largest cities, in the year to September 2020. Mogas 95 prices and retail petrol prices in the five largest cities moved in a broadly similar pattern in the year to September 2020. This indicates that, in aggregate, changes in domestic retail prices are generally driven by changes in the international price of refined petrol.
Chart 4.2: Monthly average retail petrol prices in the five largest cities and Mogas 95 prices: October 2019 to September 2020
cpl
cpl
Five largest cities (LHS) Mogas 95 (RHS)
10
20
30
40
50
60
70
80
90
80
90
100
110
120
130
140
150
160
Oct
–19
No
v–19
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–20
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
Source: ACCC calculations based on data from FUELtrac, Argus Media, and RBA.
In the year to September 2020:
� monthly average Mogas 95 prices varied by 49.6 cpl, from a high of 70.1 cpl in November 2019 to a low of 20.5 cpl in April 2020
� monthly average retail prices in the five largest cities varied by 47.9 cpl, from a high of 150.5 cpl in October 2019 to a low of 102.6 cpl in April 2020.
In the September quarter 2020:
� quarterly average Mogas 95 prices were 41.6 cpl, an increase of 10.3 cpl from the June quarter 2020
� quarterly average retail petrol prices in the five largest cities were 122.1 cpl, an increase of 13.1 cpl from the June quarter 2020.
28 Report on the Australian petroleum market—September quarter 2020
4.2.1 AUD–USD exchange rateThe AUD–USD exchange rate is a significant determinant of Australia’s retail petrol prices, because international refined petrol is bought and sold in US dollars in global markets.
Chart 4.3 shows that the AUD-USD exchange rate ranged between US 67 cents and US 70 cents between October 2019 and mid-February 2020 before decreasing substantially in late March 2020 to a low of US 56 cents. It subsequently increased steadily to US 70 cents in early June 2020 before ending the June quarter 2020 at US 69 cents.
In the September quarter 2020, the AUD-USD exchange rate increased to US 74 cents in early September before decreasing to US 71 cents at the end of September.
Chart 4.3: Daily AUD–USD exchange rates: 1 October 2019 to 30 September 2020
US
cent
s
55
60
65
70
75
Oct
–19
No
v–19
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–20
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
Source: RBA.
Note: Exchange rates are the daily RBA 4.00 pm closing rates. See: http://www.rba.gov.au/statistics/frequency/exchange-rates.html.
The quarterly average AUD–USD exchange rate in the September quarter 2020, was US 72 cents, which was US 6 cents higher than in the June quarter 2020. The appreciation of the Australian dollar against the US dollar put downward pressure on domestic retail petrol prices, as refined petrol sold on international markets was relatively cheaper in Australian dollar terms.
If the AUD–USD exchange rate had been at the March 2020 low of US 56 cents in the September quarter 2020, average retail petrol prices in Australia would have been around 6.4 cpl higher (everything else being equal).
4.3 Gross indicative retail differencesGross indicative retail differences (GIRDs) are a broad indicator of gross retail margins. They are calculated by subtracting average TGPs from average retail petrol prices. TGPs are the prices at which petrol can be purchased from wholesalers in the spot market and are posted on a regular basis on the websites of the major wholesalers. Although few wholesale transactions occur at TGPs, they can be regarded as indicative wholesale prices. TGPs, which vary across brands and cities, reflect the wholesale price of petrol only, and exclude other retail operating costs (such as freight, branding, rent, labour and utility costs).
GIRDs are a broad indicator of gross retail margins, and should not be confused with actual retail profits. The GIRDs reported by the ACCC are averages across the five largest cities over time. The level of prices, costs and profits vary significantly between retail operations and not all retail petrol sites will be achieving these gross margins. Some will be achieving higher gross margins, others lower. The ACCC
29 Report on the Australian petroleum market—September quarter 2020
petrol market studies found that profits per retail petrol site could vary considerably between retailers, with some retail sites making substantial profits and others making very little.
4.3.1 Quarterly average GIRDsAverage GIRDs in the five largest cities were 18.7 cpl in the September quarter 2020, an increase of 2.8 cpl from the previous quarter (see table 4.1). They were the highest average quarterly GIRDs (in both real and nominal terms) since the ACCC began calculating them in 2002.
Table 4.1: Quarterly average retail petrol prices, TGPs and GIRDs in the five largest cities: December quarter 2019 to September quarter 2020—cpl
Location Quarter Retail prices TGPs GIRDs
Five largest cities Dec-19 149.1 134.1 15.0
Mar-20 137.8 121.6 16.2
Jun-20 109.0 93.1 15.9
Sep-20 122.1 103.4 18.7
Year to Sep-20 129.5 113.1 16.4
Sydney Dec-19 147.1 133.5 13.6
Mar-20 137.9 121.7 16.2
Jun-20 107.8 94.9 12.9
Sep-20 119.0 104.6 14.4 Year to Sep-20 128.0 113.7 14.3
Melbourne Dec-19 149.8 134.1 15.7
Mar-20 139.6 121.7 17.9
Jun-20 110.4 92.7 17.7Sep-20 125.6 103.0 22.6
Year to Sep-20 131.4 112.9 18.5
Brisbane Dec-19 152.2 134.6 17.6
Mar-20 140.7 121.8 18.9
Jun-20 110.6 92.8 17.8
Sep-20 126.1 103.4 22.7 Year to Sep-20 132.4 113.2 19.2
Adelaide Dec-19 151.1 134.6 16.5
Mar-20 136.1 122.0 14.1
Jun-20 110.0 93.0 17.0
Sep-20 121.1 103.3 17.8
Year to Sep-20 129.6 113.3 16.3
Perth Dec-19 145.4 133.9 11.5
Mar-20 134.5 121.1 13.4
Jun-20 106.3 92.1 14.2
Sep-20 118.9 102.8 16.1
Year to Sep-20 126.3 112.5 13.8
Source: ACCC calculations based on data from FUELtrac, Ampol, BP, Mobil, Viva Energy and WA FuelWatch.
Note: Retail prices, TGPs and GIRDs in Sydney are for E10.
In the September quarter 2020, average GIRDs increased in all of the five largest capital cities. In all cities except Sydney, GIRDs increased to their highest level on record in both nominal and real terms. Sydney’s highest quarterly average GIRDs occurred in the March quarter 2020.
30 Report on the Australian petroleum market—September quarter 2020
Table 4.1 shows that in the five largest cities over the year to September 2020 quarterly average GIRDs:
� varied significantly over the year and across cities, ranging from a high of 22.7 cpl (in Brisbane in the September quarter 2020) to a low of 11.5 cpl (in Perth in the December quarter 2019)
� were lowest in Melbourne, Brisbane and Perth in the December quarter 2019, lowest in Adelaide in the March quarter 2020, and lowest in Sydney in the June quarter 2020
� were highest in Melbourne, Brisbane, Adelaide and Perth in the September quarter 2020, and highest in Sydney in the March quarter 2020.
When TGPs increase by large amounts in a short period, lags between changes in TGPs and changes in retail prices often have the effect of reducing GIRDs in the short term. Conversely, when TGPs decrease by large amounts in a short period (which occurred earlier this year) these lags often have the effect of increasing GIRDs.
4.3.2 GIRDs over a longer periodThe effects of the lags between changes in TGPs and retail prices, and their impact on GIRDs, is less prevalent when GIRDs are considered over a longer time-period.
Chart 4.4 shows 12 month average GIRDs, in real terms, across the five largest cities, calculated at the end of each quarter over the last six years.29
Chart 4.4: Twelve-month average GIRDs in the five largest cities in real terms: December 2014 to September 2020
cpl
8
9
10
11
12
13
14
15
16
17
Yea
r to
Dec
–14
Yea
r to
Mar
–15
Yea
r to
Ju
n–1
5
Yea
r to
Sep
–15
Yea
r to
Dec
–15
Yea
r to
Mar
–16
Yea
r to
Ju
n–1
6
Yea
r to
Sep
–16
Yea
r to
Dec
–16
Yea
r to
Mar
–17
Yea
r to
Ju
n–1
7
Yea
r to
Sep
–17
Yea
r to
Dec
–17
Yea
r to
Mar
–18
Yea
r to
Ju
n–1
8
Yea
r to
Sep
–18
Yea
r to
Dec
–18
Yea
r to
Mar
–19
Yea
r to
Ju
n–1
9
Yea
r to
Sep
–19
Yea
r to
Dec
–19
Yea
r to
Mar
–20
Yea
r to
Ju
n–2
0
Yea
r to
Sep
–20
Source: ACCC calculations based on data from FUELtrac, Informed Sources, Ampol, BP, Mobil, Viva Energy, WA FuelWatch, and ABS, 6401.0 Consumer Price Index, Australia, September 2020, Tables 1 and 2. CPI: All Groups, Index Numbers and Percentage Changes, at: https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release#data-download, accessed on 17 November 2020.
Note: Real GIRDs are shown in September 2020 dollars.
The chart shows that across the five largest cities there was a substantial increase in 12 month average GIRDs between December 2019 and September 2020 (of 3.8 cpl). Twelve month average GIRDs increased to their highest on record in both nominal and real terms in September 2020.
29 i.e. using average retail prices and average TGPs over 12 month periods to the end of each quarter.
31 Report on the Australian petroleum market—September quarter 2020
It also shows that:
� there was a substantial increase in 12 month average GIRDs between March 2015 and June 2016 (of 3.5 cpl)
� between December 2015 and September 2017, 12 month average GIRDs were in a 0.9 cpl band between 11.1 cpl and 12.0 cpl
� between December 2017 and December 2019, 12 month average GIRDs were in a 0.9 cpl band between 11.9 cpl and 12.8 cpl.
The significant increase in average GIRDs over the last year is also shown in AIP data. In the week ending 27 September 2020 national average GIRDs over the previous 12 months were 17.0 cpl, which was 4.1 cpl higher than similar data reported for the week ending 29 September 2019.30
The ACCC analysed financial data provided by petrol companies on retail gross profits (i.e. retail operating costs and net profits) from 2005–06 to 2017–18 to further understand the reasons for the higher GIRDs from 2014–15 onwards.31 The analysis found that both retail operating costs and net profits on RULP increased during the period, and particularly between 2013–14 and 2016–17, suggesting that higher GIRDs had been influenced by increases in both operating costs and profits.32
4.3.3 Lower petrol demand may have continued to influence the high GIRDs in the September quarter
The high GIRDs in the March and June quarters 2020 are likely to have been influenced by the sharp decrease in TGPs over a short period and lags between changes in TGPs and changes in retail prices. The influence of lags was likely to have been exacerbated by the substantial reduction in demand arising from the COVID-19 restrictions, which will have further increased the fuel turnover time in many locations and may have meant some retailers were not passing on the full decrease in TGPs to retail prices.
The influence of lags was less relevant in the September quarter 2020 because TGPs were relatively stable. Daily average TGPs across the five largest cities in the quarter remained in a 4.6 cpl band between a high of 105.3 cpl and a low of 100.7 cpl. However, the effects of COVID-19 on petrol demand may have continued to contribute to the high GIRDs in the September quarter.
Sales volumes have been significantly lower over the past six months and retailers may be keeping retail prices higher to cover their fixed costs
Petrol sales volumes across Australia in the six-month period April to September 2020 were around 22% lower than in the same period last year.
Petrol retailing is a high-volume low-margin business with many fixed costs (such as rent and branding). This means that when sales volumes decline, the cost per unit of petrol will increase. As a result, in order to keep revenue to partially cover their fixed costs, some retailers may be keeping retail prices higher than they otherwise would.
Furthermore, the substantial decrease in petrol demand from March 2020 has had negative implications for refineries throughout the world, including in Australia. Many refineries have reported losses and/or have been temporarily shut down. For example, in the September quarter 2020, Viva Energy announced an expected loss of approximately $30 million at its Geelong refinery and Ampol announced losses of $82 million at its Lytton refinery.33
30 Australian Institute of Petroleum, Weekly Petrol Prices Report—week ending 27 September 2020, p. 6, and Weekly Petrol Prices Report—week ending 29 September 2019, p. 6.
31 ACCC, Financial performance of the Australian downstream petroleum industry 2002 to 2018, 22 April 2020, pp. 34–36.
32 The analysis compared GIRDs (which are based on price data) with retail gross profit financial results on RULP (which are based on financial data). Both measures, although not directly comparable, showed a broadly similar upward trend over the longer term.
33 Viva Energy Australia, Viva Energy market update, ASX release, 14 October 2020 at: https://investor.vivaenergy.com.au/investor-centre/?page=asx-announcements, accessed on 17 November 2020; and Ampol Limited, Unaudited financial results for 3Q 2020, ASX Release, 19 October 2020 at: https://wcsecure.weblink.com.au/pdf/ALD/02295170.pdf, accessed on 17 November 2020.
32 Report on the Australian petroleum market—September quarter 2020
For those vertically-integrated participants in the petrol market that are involved in the refining, wholesale and retail sectors, there may have been an incentive to attempt to partly offset losses in refining through the retail level.
Some vertically-integrated participants have reported stronger retail fuel margins in the September quarter 2020
Two large retailers publicly acknowledged, when they announced their latest financial results, that retail margins were higher in the September quarter 2020.
On 14 October 2020, Viva Energy, which sets retail prices at the Coles Express network of retail sites, provided a business update for the three months to 30 September 2020 which stated that ‘.…the retail business continues to recover from the earlier impacts of various stay-at-home restrictions across the country….’ and that Viva Energy ‘….continues to benefit from relatively stronger retail fuel margins compared with the prior year’.34
On 19 October 2020, Ampol announced unaudited third quarter 2020 financial results which noted ‘.…favourable industry retail fuel margins….’ while ‘.…acknowledging weaker volume and market conditions caused by persisting lower demand in the quarter’.35
4.3.4 The increase in GIRDs is reflected in the change in the shape of the petrol price cycles
The increase in GIRDs in the five largest cities is reflected in the change in the shape of the petrol price cycles.
From March 2020 (when TGPs decreased sharply), the price cycles in Sydney, Melbourne, Brisbane and Adelaide became longer in duration and did not get as close to TGPs as they had previously at the trough price. In Perth, while regular weekly price cycles continued, they also did not get as close to TGPs as they had previously at the trough price.
This can be seen in charts 4.5 to 4.7, which show daily average retail petrol prices, TGPs and GIRDs in Perth, Melbourne and Brisbane respectively for the year to 30 September 2020.
Chart 4.5 shows that while regular weekly price cycles continued in Perth in the September quarter 2020, the average price increase from the trough to the peak of the price cycle increased over the last 12 months. It went from an average increase of 18.7 cpl in the December quarter 2019 to an average increase of 31.3 cpl in the September quarter 2020.
34 Viva Energy Australia, Viva Energy market update, ASX release, 14 October 2020.
35 Ampol Limited, Unaudited financial results for 3Q 2020, ASX Release, 19 October 2020.
33 Report on the Australian petroleum market—September quarter 2020
Chart 4.5: Daily average retail petrol prices, TGPs and GIRDs in Perth: 1 October 2019 to 30 September 2020
GIRDsRetail prices TGPs
Oct
–19
No
v–19
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–20
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
-10
10
30
50
70
90
110
130
150
170
190
cpl
Source: ACCC calculations based on data from FUELtrac, Ampol, BP, Mobil, Viva Energy and WA FuelWatch,
Charts 4.6 and 4.7 show that the shape of the price cycles in Melbourne and Brisbane in the September quarter 2020 are different from those in the December quarter 2019.
In the September quarter 2020, average retail prices took longer to reach the trough price, and when they did, there was a larger difference between the trough price and average TGPs.
The average difference between the trough price and average TGPs in Melbourne was 8.5 cpl in the September quarter 2020, compared with an average difference of 3.0 cpl in the December quarter 2019. In Brisbane, the average difference between the trough price and average TGPs was 8.5 cpl in the September quarter 2020, compared with an average difference of 2.1 cpl in the December quarter 2019.
Chart 4.6: Daily average retail petrol prices, TGPs and GIRDs in Melbourne: 1 October 2019 to 30 September 2020
cpl
GIRDsRetail prices TGPs
Oct
–19
No
v–19
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–20
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
-10
10
30
50
70
90
110
130
150
170
190
Source: ACCC calculations based on data from FUELtrac, Ampol, BP, Mobil and Viva Energy.
34 Report on the Australian petroleum market—September quarter 2020
Chart 4.7: Daily average retail petrol prices, TGPs and GIRDs in Brisbane: 1 October 2019 to 30 September 2020
cpl
GIRDsRetail prices TGPs
Oct
–19
No
v–19
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–20
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
-10
10
30
50
70
90
110
130
150
170
190
Source: ACCC calculations based on data from FUELtrac, Ampol, BP, Mobil and Viva Energy.
4.4 Elements of the price change in the quarterChart 4.8 shows the change in the components of retail petrol prices across the five largest cities between the June quarter 2020 and September quarter 2020. The chart separates the other costs and margins component into:
� the retail component (represented by GIRDs)
� the other wholesale costs and margins component (which includes international shipping costs and import costs).
Chart 4.8: Changes in the components of average retail petrol prices in the five largest cities: June quarter 2020 to September quarter 2020
53.6
Jun–20 Mogas 95 Exchange rate Other wholesalecosts and margins
Taxes GIRDs Sep–20
cpl
Mogas 95 Other wholesale costs and margins Taxes GIRDs
109.0 cpl+14.0 cpl
-3.7 cpl
+10.3 cpl
-0.9 cpl +0.9 cpl +2.8 cpl
122.1 cpl+13.1 cpl
31.331.341.6
11.0
10.1
50.8
51.7
15.9
18.7
0
20
40
60
80
100
120
140
Source: ACCC calculations based on data from FUELtrac, Argus Media, Ampol, BP, Mobil, Viva Energy, WA FuelWatch, RBA and ATO.
Notes: All prices are in Australian cents per litre.
The taxes component includes fuel excise and wholesale GST. The small amount of retail GST is included in GIRDs rather than in taxes, to be consistent with GIRDs reported elsewhere in this report.
35 Report on the Australian petroleum market—September quarter 2020
The increase in the average retail price of petrol in the five largest cities by 13.1 cpl in the September quarter 2020 was predominantly driven by an increase in the price of Mogas 95 (10.3 cpl).
As noted earlier, the AUD–USD exchange rate is a significant determinant of Australia’s retail petrol prices because international refined petrol is bought and sold in US dollars in global markets. Excluding the effect of changes in the AUD–USD exchange rate (which increased by US 6 cents in the quarter), Mogas 95 prices would have increased by 14.0 cpl in the quarter. However, the increase in the AUD–USD exchange rate offset the influence of the increase in Mogas 95 prices by 3.7 cpl in Australian cents per litre terms. The net effect of movements in Mogas 95 prices and the AUD–USD exchange rate was that Mogas 95 prices in Australian cents per litre increased by 10.3 cpl. The other main influence on retail prices in the quarter was the increase in GIRDs (2.8 cpl).
36 Report on the Australian petroleum market—September quarter 2020
5. Retail petrol price movements in the smaller capital cities and in regional locations
This chapter analyses petrol prices in the three smaller capital cities (Canberra, Hobart and Darwin) and in regional locations. The ACCC monitors fuel prices in over 190 regional locations across Australia. These locations are listed in appendix B.
5.1 Prices in the three smaller capital citiesIn the September quarter 2020, average retail prices increased in Canberra (by 7.5 cpl) and Darwin (by 2.0 cpl) and decreased in Hobart (by 2.2 cpl).36
Table 5.1 shows quarterly average retail prices in the September quarter 2020, the June quarter 2020, and the change, in the three smaller capital cities and in the five largest cities. It also shows the differential between quarterly average prices in each of the smaller cities and the five largest cities.
Table 5.1: Quarterly average retail petrol prices in each of the three smaller capital cities, and the five largest cities in aggregate: June quarter 2020 and September quarter 2020—cpl
Quarter Canberra Hobart DarwinFive largest
citiesDifferential
Canberra Hobart Darwin
Jun-20 115.2 126.3 116.0 109.0 6.2 17.3 7.0
Sep-20 122.7 124.1 118.0 122.1 0.6 2.0 -4.1
Change 7.5 -2.2 2.0 13.1 -5.6 -15.3 -11.1
Source: ACCC calculations based on FUELtrac data.
Chart 5.1 shows monthly average prices in the three smaller capital cities and the five largest cities in the year to September 2020. It shows that monthly average retail prices were:
� always highest in Hobart
� lower in Darwin than in the five largest cities except in March, April and May 2020
� higher in Canberra than in the five largest cities except in October 2019, June 2020 and July 2020.
36 Seven-day rolling average retail petrol prices in each of the three smaller capital cities between 1 October 2019 and 30 September 2020 are provided in section 5.4.
37 Report on the Australian petroleum market—September quarter 2020
Chart 5.1: Monthly average retail petrol prices in Canberra, Hobart, Darwin and the five largest cities: October 2019 to September 2020
90
100
110
120
130
140
150
160
170
Oct
–19
No
v–1
9
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–2
0
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
cpl
Canberra Hobart Darwin Five largest cities
Source: ACCC calculations based on data from FUELtrac.
Factors that may lead to relatively higher prices in Canberra, Hobart and Darwin are similar to those factors influencing prices in regional locations (outlined in section 5.2).
Recent movements in Darwin retail prices are discussed further in appendix C.
5.2 Influences on regional petrol pricesMovements in retail petrol prices in regional locations are largely driven by changes in international refined petrol prices and the AUD–USD exchange rate, as they are in the five largest cities.
However, prices are generally higher in regional locations. A number of factors may contribute to these higher prices, including:
� a lower level of local competition
� lower volumes of fuel sold
� distance/location factors
� lower convenience store sales.
The influence of these factors varies significantly from location to location. This means that there may be substantial differences in prices between specific regional locations.
5.3 Regional petrol prices in aggregateIn the September quarter 2020, average prices in regional locations in aggregate (regional prices) were 120.0 cpl. This was 2.1 cpl lower than average prices in the five largest cities (122.1 cpl). In the June quarter 2020, average regional prices were 7.5 cpl higher than average prices in the five largest cities.
Chart 5.2 shows that monthly average regional prices were stable in the September quarter 2020. In July 2020, monthly average regional prices were 120.3 cpl, an increase of 3.1 cpl from June 2020 (117.2 cpl). Prices decreased to 119.8 cpl in August 2020 and increased marginally to 119.9 cpl in September 2020.
38 Report on the Australian petroleum market—September quarter 2020
Chart 5.2: Monthly average retail petrol prices in regional locations in aggregate and the five largest cities: October 2019 to September 2020
100
110
120
130
140
150
160
Oct
–19
No
v–1
9
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–2
0
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
cpl
All regional locations Five largest cities
Source: ACCC calculations based on data from FUELtrac.
Between June 2020 and September 2020, monthly average prices in regional locations increased by 2.7 cpl, which was 0.4 cpl less than the increase across the five largest cities over the same period (3.1 cpl).
The monthly average differential between regional prices and prices in the five largest cities varied substantially over the year to September 2020, ranging from 18.3 cpl above the five largest cities in April 2020 to 3.1 cpl below in July 2020.
In September 2020, average prices in 130 locations (representing around 72% of monitored locations) were lower than the average price in the five largest cities.
Further information on petrol price movements in the September quarter 2020 in all locations monitored by the ACCC is presented in appendix B.
5.3.1 Regional prices and lagsWhile retail petrol prices in regional locations generally follow movements in the international price of refined petrol, they often do not respond as quickly—either up or down—as prices in the five largest cities.
For example, average petrol prices in the five largest cities increased in July 2019 in line with international refined petrol prices, whereas average petrol prices in regional locations continued to decrease. Conversely, average petrol prices in the five largest cities decreased substantially between February and April 2020 while average petrol prices in regional locations decreased by a smaller amount. Regional petrol prices continued to decrease in May 2020, while prices in the five largest cities increased.
One reason for the ‘stickiness’ of retail petrol prices in many regional locations is that there are lags between a change in wholesale prices and a change in retail prices. These lags are primarily influenced by the frequency of retail site turnover of fuel, and are longer in regional locations where volume turnover is smaller and the degree of competition is often not as intense. Additionally, during the COVID-19 situation there have been fewer motorists purchasing fuel from retail sites, which further increased the turnover time.
Another influence is that there are some regional locations where retail prices do not change by the same amount as a change in wholesale prices, both when wholesale prices decrease and when they increase. This is often related to the size and geographical location of the regional location, as well as the degree of retail competition.
39 Report on the Australian petroleum market—September quarter 2020
5.4 Prices in each of the states and territoriesCharts 5.3 to 5.9 show seven-day rolling average retail petrol prices in regional locations in each state and the NT, along with those of the relevant capital city, from 1 October 2019 to 30 September 2020. These charts also show the average differential between prices in regional locations in the state/territory and the respective capital city in the months of June 2020 and September 2020, and in financial year 2019–20.
In September 2020, monthly average regional prices were lower than average capital city prices in Victoria, Queensland, SA and Tasmania, and higher in NSW, WA and the NT.
Chart 5.3: Seven-day rolling average petrol prices in NSW regional locations and Sydney: 1 October 2019 to 30 September 2020
80
90
100
110
120
130
140
150
160
170
Oct
–19
No
v–1
9
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–2
0
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
cpl
NSW regional locations Sydney
Sep avg: 2.4 cpl
2019–20 avg: 5.8 cpl
Jun avg: 0.2 cpl
Source: ACCC calculations based on data from FUELtrac.
Notes: E10 prices are used for Sydney and RULP prices are used for all NSW regional locations.
A seven-day rolling average price is the average of the current day’s price and prices on the six previous days.
Chart 5.4: Seven-day rolling average petrol prices in Victorian regional locations and Melbourne: 1 October 2019 to 30 September 2020
80
90
100
110
120
130
140
150
160
170
Oct
–19
No
v–1
9
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–2
0
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
cpl
Victorian regional locations Melbourne
Sep avg: -11.5 cpl
2019–20 avg: -0.2 cpl
Jun avg: -6.0 cpl
Source: ACCC calculations based on data from FUELtrac.
Notes: A seven-day rolling average price is the average of the current day’s price and prices on the six previous days.
A negative number means that average regional prices are lower than average capital city prices.
40 Report on the Australian petroleum market—September quarter 2020
Chart 5.5: Seven-day rolling average petrol prices in Queensland regional locations and Brisbane: 1 October 2019 to 30 September 2020
80
90
100
110
120
130
140
150
160
170O
ct–1
9
No
v–1
9
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–2
0
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
cpl
Queensland regional locations Brisbane
Jun avg: -5.7 cpl
2019–20 avg: 0.1 cpl
Sep avg: -4.9 cpl
Source: ACCC calculations based on data from FUELtrac.
Notes: A seven-day rolling average price is the average of the current day’s price and prices on the six previous days.
A negative number means that average regional prices are lower than average capital city prices.
Chart 5.6: Seven-day rolling average petrol prices in SA regional locations and Adelaide: 1 October 2019 to 30 September 2020
80
90
100
110
120
130
140
150
160
170
Oct
–19
No
v–1
9
Dec
–19
Jan
–20
Feb
-20
Mar
-20
Ap
r–2
0
May
–20
Jun
–20
Jul–
20
Au
g-2
0
Sep
-20
cpl
SA regional locations Adelaide
Jun avg: -3.3 cpl
2019–20 avg: 1.6 cpl
Sep avg: -0.9 cpl
Source: ACCC calculations based on data from FUELtrac.
Notes: A seven-day rolling average price is the average of the current day’s price and prices on the six previous days.
A negative number means that average regional prices are lower than average capital city prices.
41 Report on the Australian petroleum market—September quarter 2020
Chart 5.7: Seven-day rolling average petrol prices in WA regional locations and Perth: 1 October 2019 to 30 September 2020
80
90
100
110
120
130
140
150
160
170O
ct–1
9
No
v–1
9
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–2
0
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
-20
cpl
WA regional locations Perth
Jun avg: 7.8 cpl
2019–20 avg: 11.8 cpl
Sep avg: 5.8 cpl
Source: ACCC calculations based on data from FUELtrac.
Note: A seven-day rolling average price is the average of the current day’s price and prices on the six previous days.
Chart 5.8: Seven-day rolling average petrol prices in Tasmanian regional locations and Hobart: 1 October 2019 to 30 September 2020
80
90
100
110
120
130
140
150
160
170
Oct
–19
No
v–1
9
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–2
0
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
cpl
Tasmanian regional locations Hobart
Jun avg: -1.0 cpl
2019–20 avg: -2.2 cpl
Sep avg: -0.1 cpl
Source: ACCC calculations based on data from FUELtrac.
Notes: A seven-day rolling average price is the average of the current day’s price and prices on the six previous days.
A negative number means that average regional prices are lower than average capital city prices.
42 Report on the Australian petroleum market—September quarter 2020
Chart 5.9: Seven-day rolling average petrol prices in NT regional locations and Darwin: 1 October 2019 to 30 September 2020
80
90
100
110
120
130
140
150
160
170O
ct–1
9
No
v–1
9
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–2
0
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
cpl
NT regional locations Darwin
Jun avg: 12.6 cpl
2019–20 avg: 14.3 cpl
Sep avg: 9.4 cpl
Source: ACCC calculations based on data from FUELtrac.
Note: A seven-day rolling average price is the average of the current day’s price and prices on the six previous days.
Charts 5.3 to 5.9 show that price comparisons between capital cities and regional locations are significantly influenced by price cycles in a number of the capital cities over the short term. An example is the price differential between Sydney and regional locations in NSW in May 2020.
Chart 5.10 shows seven-day rolling average retail petrol prices in Canberra from 1 October 2019 to 30 September 2020. There are no prices available for locations in the ACT other than Canberra.
Chart 5.10: Seven-day rolling average petrol prices in Canberra: 1 October 2019 to 30 September 2020
80
90
100
110
120
130
140
150
160
170
Oct
–19
No
v–1
9
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–2
0
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
cpl
Source: ACCC calculations based on data from FUELtrac.
Note: A seven-day rolling average price is the average of the current day’s price and prices on the six previous days.
43 Report on the Australian petroleum market—September quarter 2020
6. Crude oil and refined petrol price movements
The main influences on movements in retail petrol prices in Australia are the international price of refined petrol (which, in turn, is influenced by the price of crude oil) and the AUD–USD exchange rate.
Crude oil prices are an important influence on movements in refined petrol prices around the world. There are a number of international benchmarks used for pricing crude oil, including West Texas Intermediate (WTI), Brent, Tapis and Dubai. The most widely used benchmark in global markets is Brent crude oil.
The relevant international benchmark price for petrol in Australia is the price of refined petrol in the Asia-Pacific region. For RULP, it is Singapore Mogas 95 Unleaded (Mogas 95). This benchmark is used for pricing petrol in Australia due to Australia’s proximity to Singapore, which is one of the world’s most important trading and refining centres.
Movements in the AUD–USD exchange rate were analysed in chapter 4.
6.1 Crude oil and refined petrol price movements over the last two years
Chart 6.1 shows movements in weekly average Brent crude oil and Mogas 95 prices in the two years to September 2020.
Chart 6.1: Weekly average Brent crude oil and Mogas 95 prices: October 2018 to September 2020
0
10
20
30
40
50
60
70
80
90
100
Oct
–18
Jan
–19
Ap
r–1
9
Jul–
19
Oct
–19
Jan
–20
Ap
r–2
0
Jul–
20
US
D p
er b
l
Brent crude oil Mogas 95
Source: ACCC calculations based on data from Argus Media and OPIS.
Weekly average Brent crude oil prices began the period at around USD 84 per barrel, before decreasing sharply to around USD 52 per barrel by the end of December 2018. They trended upwards in early 2019, and for the next eleven months were within a USD 15 per barrel band between USD 73 per barrel and USD 58 per barrel. Prices decreased sharply to around USD 12 per barrel in late April 2020.37 They then increased steadily to around USD 42 per barrel at the end of June 2020.
37 Weekly average Brent crude oil prices were last at this level in early March 1999.
44 Report on the Australian petroleum market—September quarter 2020
In the September quarter 2020, weekly average Brent crude oil prices remained relatively stable within a USD 3 per barrel band between USD 43 per barrel and USD 46 per barrel for the first two months, before decreasing to around USD 39 per barrel in mid-September 2020. Prices ended the September quarter 2020 at around USD 40 per barrel.
Weekly average Mogas 95 prices moved in a similar manner to Brent crude oil prices over the two-year period. They began the period at around USD 94 per barrel before decreasing sharply to around USD 55 per barrel by the end of December 2018. They trended upwards in early 2019, and for the next eleven months were within a USD 18 per barrel band between USD 83 per barrel and USD 65 per barrel. Prices decreased sharply to around USD 19 per barrel in late April 2020. They then increased to around USD 48 per barrel at the end of June 2020.38
In the September quarter 2020, weekly average Mogas 95 prices remained relatively stable within a USD 4 per barrel band between USD 45 per barrel and USD 49 per barrel. Prices ended the quarter at USD 48 per barrel, which was around the same level as the start of the quarter.
Brent crude oil and Mogas 95 prices were significantly higher in the September quarter 2020:
� quarterly average Brent crude oil prices were around USD 43 per barrel (an increase of USD 15 per barrel, or 54%, from the previous quarter)
� quarterly average Mogas 95 prices were around USD 47 per barrel (an increase of USD 14 per barrel, or 42%, from the previous quarter).
6.2 Influences on crude oil prices Changes in crude oil prices over the past two years were largely influenced by agreements (and disagreements) made by the Organisation of the Petroleum Exporting Countries (OPEC) cartel, and some other crude oil producing countries (including Russia), to cut production.
The sharp fall in crude oil prices from early October 2018 was due to concerns over a global trade war and increasing US shale oil production.39 Increasing crude oil prices in early 2019 were due to increasing compliance with production cuts among OPEC countries and Russia.40 On 1 July 2019, OPEC announced that it had agreed to extend oil supply cuts until March 2020.41 In December 2019, OPEC and non-OPEC nations agreed to further cuts in crude oil production of 0.5 million barrels per day until 31 March 2020, increasing the agreed cuts from 1.2 million barrels per day to 1.7 million barrels per day.42
The fall in crude oil prices from mid-January 2020 was influenced by the news coming out of China about the COVID-19 outbreak, and its impact on Chinese economic activity. On 30 January 2020, the World Health Organisation declared the virus a Public Health Emergency of International Concern.43 As countries imposed restrictions on travel and economic activity, demand for crude oil and refined petrol products decreased significantly.
38 Weekly average Mogas 95 prices were last at this level in mid-June 1999.
39 Reuters, A slippery trade: oil slump proves bears right, 24 November 2018, at: https://www.reuters.com/article/us-marketsoilmajors-bears-graphic/a-slippery-trade-oil-slump-proves-bears-right-idUSKCN1NS1IU , accessed on 17 November 2020.
40 Reuters, OPEC cuts oil supply steeply but sees growing 2019 headwinds, 12 February 2019, at: https://www.reuters.com/article/us-oil-opec-report/opec-cuts-oil-supply-steeply-but-sees-growing-2019-headwinds-idUSKCN1Q11GA, accessed on 17 November 2020.
41 Reuters, OPEC extends oil cut to prop up prices as economy weakens, 1 July 2019, at: https://www.reuters.com/article/us-oil-opec/opec-extends-oil-cut-to-prop-up-prices-as-economy-weakens-idUSKCN1TW1LF, accessed on 17 November 2020.
42 Organisation of the Petroleum Exporting Countries, The 7th OPEC and non-OPEC Ministerial Meeting concludes, media release, 6 December 2019, at: https://www.opec.org/opec_web/en/press_room/5797.htm, accessed on 17 November 2020.
43 World Health Organisation, Statement on the second meeting of the International Health Regulations (2005) Emergency Committee regarding the outbreak of novel coronavirus (2019-nCoV), 30 January 2020, at: https://www.who.int/news/item/30-01-2020-statement-on-the-second-meeting-of-the-international-health-regulations-(2005)-emergency-committee-regarding-the-outbreak-of-novel-coronavirus-(2019-ncov), accessed on 17 November 2020.
45 Report on the Australian petroleum market—September quarter 2020
This decrease in demand was compounded by the inability of the OPEC cartel and other crude oil producing countries to agree on further crude oil production cuts at their meeting on 5 March 2020. On 6 March 2020, Saudi Arabia (the world’s largest oil exporter) boosted production to its full capacity of 12.3 million barrels per day. Saudi Arabia also announced discounts of almost 20% in key markets. The result was an immediate drop of more than 30% in crude oil prices.44
In April 2020, OPEC, Russia and other crude oil producing countries agreed to cut output by 9.7 million barrels per day in May and June 2020.45 The agreement came as crude oil prices continued to decrease due to falling worldwide consumption resulting from COVID-19 and a 13-month high in OPEC’s oil output in April 2020.46 These production cuts ultimately led to a steady increase in crude oil prices over the rest of the June quarter 2020.
In July and August 2020, crude oil prices remained relatively stable. However, prices fell by around 10% in September 2020. This was attributed to an increase in the supply of crude oil from OPEC countries (which produced an additional 2 million barrels per day in September 2020 compared with June 2020) and concerns of another demand shock due to rising cases of COVID-19 globally.47
6.3 Refiner marginThe difference between the price of refined petrol and the price of crude oil is referred to as the refiner margin. In the September quarter 2020, the average refiner margin was USD 4.1 per barrel, a decrease of USD 1.1 per barrel from the previous quarter (USD 5.2 per barrel).
This was the lowest quarterly average refiner margin since the March quarter 2019. The lower refiner margins were likely influenced by weak demand and an abundance of inventories.48
6.4 Crude oil prices in the long term As with many commodities, crude oil prices fluctuate greatly. In the short term, market sentiment about economic conditions and geo-political events can drive rapid movements in crude oil prices. Over the medium to longer term, prices are driven by supply and demand factors, with periods of high or low prices lasting several years.
Extended periods of high crude oil prices provide an incentive for producers to invest in exploration and expansion. This leads to an increase in supply, which in turn puts downward pressure on prices. Conversely, when crude oil prices are low, producers tend not to invest, which puts upward pressure on prices, as growth in demand is not met by supply.
Chart 6.2 shows that, over the 40 years to September 2020, WTI crude oil prices in real terms were on average around USD 61 per barrel. In the September quarter 2020, real WTI crude oil prices were on average around USD 41 per barrel, which was USD 13 per barrel higher than the June quarter 2020 (USD 28 per barrel) and USD 20 per barrel lower than the 40-year average.
44 The World Bank, Coping with a Dual Shock: COVID-19 and Oil Prices, Brief, 14 April 2020, at: https://www.worldbank.org/en/region/mena/brief/coping-with-a-dual-shock-coronavirus-covid-19-and-oil-prices, accessed on 17 November 2020.
45 Reuters, Oil mixed as demand worries offset gains from output cut deal, 13 April 2020, at: https://www.reuters.com/article/us-global-oil/oil-futures-little-changed-despite-record-output-cut-by-opec-idUSKCN21U0WQ?feedType=mktg&feedName=ousivMolt&WT.mc_id=Partner-Google, accessed on 17 November 2020.
46 Reuters, OPEC April oil output surges to 13-month high before new cut deal, 1 May 2020, at: https://www.reuters.com/article/oil-opec-survey/opec-april-oil-output-surges-to-13-month-high-before-new-cut-deal-idUSL8N2CI8JG, accessed on 17 November 2020.
47 Reuters, OPEC September oil output rises for third month on Libya restart, Iran, 1 October 2020, at: https://www.reuters.com/article/uk-oil-opec-survey/opec-september-oil-output-rises-for-third-month-on-libya-restart-iran-idUKKBN26L2WY, accessed on 17 November 2020.
48 Reuters, Oil refiners worldwide struggle with weak demand, inventory glut, 21 September 2020, at: https://www.reuters.com/article/global-oil-refineries/oil-refiners-worldwide-struggle-with-weak-demand-inventory-glut-idUSL1N2GC1PI, accessed on 17 November 2020.
46 Report on the Australian petroleum market—September quarter 2020
Chart 6.2: Monthly average real WTI crude oil prices: October 1980 to September 2020
0
20
40
60
80
100
120
140
160
18019
80
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
US
D p
er b
l
WTI 40-year average
Source: ACCC calculations based on data used with permission from The Wall Street Journal, WSJ.com, Copyright 2015 Dow Jones & Company, Inc. All rights reserved, Reuters and U.S. Department of Labor, Bureau of Labor Statistics, Consumer Price Index for all urban consumers, at: https://beta.bls.gov/dataViewer/view/timeseries/CUUR0000SA0, accessed on 17 November 2020.
Note: Real prices are shown in September 2020 dollars.
47 Report on the Australian petroleum market—September quarter 2020
7. Diesel and LPG prices
7.1 Diesel price movementsQuarterly average retail diesel prices in the five largest cities were 120.2 cpl in the September quarter 2020, a decrease of 1.9 cpl from the June quarter 2020 (122.1 cpl).
The appropriate international benchmark price for diesel is the price of Singapore Gasoil with 10 parts per million sulphur content (Gasoil 10 ppm). International demand for diesel is different from that for petrol, in part because of diesel’s off-road, industrial and electricity generation uses. However, both petrol and diesel are refined from crude oil and their prices broadly tend to follow similar movements over the long term.
Chart 7.1 shows that seven-day rolling average retail diesel prices in the five largest cities broadly tracked Gasoil 10 ppm prices over the year to 30 September 2020.
Chart 7.1: Seven-day rolling average retail diesel prices in the five largest cities and Gasoil 10 ppm prices: 1 October 2019 to 30 September 2020
15
25
35
45
55
65
75
85
95
85
95
105
115
125
135
145
155
165
Oct
–19
No
v–1
9
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–2
0
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
cpl
cpl
Retail prices (LHS) Gasoil 10 ppm (lagged 11 days) (RHS)
Source: ACCC calculations based on data from FUELtrac, Argus Media and RBA.
Note: Gasoil 10 ppm prices are lagged by 11 days as there is generally around a one- to two-week lag between changes in international prices and changes in retail prices in the five largest cities.
Seven-day rolling average retail diesel prices were 119.7 cpl at the beginning of the September quarter 2020. After decreasing significantly in the previous two quarters, retail prices remained relatively stable throughout the September quarter 2020 at around 120 cpl, and ended the quarter at 118.6 cpl.
Seven-day rolling average Gasoil 10 ppm prices in Australian cents per litre terms were 43.2 cpl at the beginning of the quarter, after decreasing significantly earlier in the year and then increasing during the June quarter 2020. Gasoil 10 ppm prices were relatively stable for most of the September quarter 2020, but decreased from mid-September and ended the quarter at around 37.0 cpl.
Quarterly average Gasoil 10 ppm prices in the September quarter 2020 in Australian cents per litre were 42.2 cpl, an increase of 5.9 cpl from the June quarter 2020 (36.3 cpl).
Unlike petrol prices, diesel prices in the five largest cities do not move in cycles. Diesel prices may not have price cycles because a large proportion of sales are to commercial users who purchase diesel on a
48 Report on the Australian petroleum market—September quarter 2020
contractual basis. According to the AIP, only around 25% of the diesel used in Australia is sold through retail outlets, and much of that is sold to account customers with very little sold to private customers.49
7.2 Components of diesel prices in the quarter Chart 7.2 shows the three broad components of the average retail diesel price in the five largest cities in the September quarter 2020. The chart shows that:
� the international price of Gasoil 10 ppm accounted for 35% of the average pump price of diesel, an increase of 5 percentage points from the June quarter 2020
� taxes accounted for 44% of the average price, an increase of 1 percentage point from the June quarter 2020
� other costs and margins represented 21% of the average price, a decrease of 6 percentage points from the June quarter 2020.
Chart 7.2: Components of the average retail diesel price in the five largest cities in the September quarter 2020
Other costs and marginsTaxesGasoil 10 ppm
120.2 cpl
DIESEL
21 24.8
53.2
42.2
44
35
cpl%
Source: ACCC calculations based on data from FUELtrac, Argus Media, RBA and ATO.
As with the average retail price of petrol in the September quarter 2020, taxes also accounted for the largest component of the average retail price of diesel in the quarter.
7.3 LPG price movementsQuarterly average retail LPG prices in the five largest cities in the September quarter 2020 were 76.9 cpl, a decrease of 1.7 cpl from the June 2020 quarter (78.6 cpl).50
The appropriate international benchmarks for LPG prices are the Saudi Aramco Contract Prices for propane and butane (Saudi CP). These prices only change once a month, at the start of each month. International LPG prices loosely move in line with international refined petrol and diesel prices.
Seven-day rolling average retail LPG prices were 77.4 cpl at the beginning of the September quarter 2020 (see chart 7.3). They remained relatively stable throughout the quarter, staying within a 1.8 cpl band, and ending the quarter at 76.3 cpl.
49 Australian Institute of Petroleum, Facts about diesel prices & the Australian fuel market, at: https://www.aip.com.au/sites/default/files/download-files/2020-02/Facts%20about%20Diesel%20Prices%20and%20the%20Australian%20Fuel%20Market.pdf, accessed on 17 November 2020.
50 References to LPG refer to automotive liquefied petroleum gas.
49 Report on the Australian petroleum market—September quarter 2020
The Saudi CP benchmarks in Australian cents per litre were 27.7 cpl at the beginning of the September quarter 2020, which was 0.8 cpl lower than in June 2020 (28.5 cpl). The benchmark prices decreased marginally throughout the quarter to 27.3 cpl in September 2020.
Chart 7.3: Seven-day rolling average retail LPG prices in the five largest cities and monthly Saudi CP benchmarks: 1 October 2019 to 30 September 2020
5
15
25
35
45
55
65
35
45
55
65
75
85
95
Oct
–19
No
v–1
9
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–2
0
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
cpl
cpl
Retail prices (LHS) Saudi CP (RHS)
Source: ACCC calculations based on data from FUELtrac, Reuters and RBA.
Chart 7.3 shows that relative to other fuel types, movements in retail LPG prices in the year to 30 September 2020 were not as responsive to movements in international benchmark prices.
As the Saudi CP benchmarks only change at the start of each month, the relationship between movements in the international benchmark prices and retail prices for LPG is different from petrol and diesel. Furthermore, international LPG prices are influenced by non-transport factors, such as demand for heating, particularly in the Northern Hemisphere.
Like diesel prices, retail LPG prices tend to be less volatile than petrol prices and do not move in cycles. LPG usage in Australia is significantly less than petrol and diesel usage, and there are fewer retailers of LPG, particularly outside Victoria (where around half of Australia’s LPG is sold).
7.4 Components of LPG prices in the quarter Chart 7.4 shows the three broad components of the average retail LPG price in the five largest cities in the September quarter 2020. The chart shows that:
� the Saudi CP international benchmarks accounted for 36% of the pump price of LPG, an increase of 3 percentage points from the June quarter 2020
� taxes accounted for 27% of the average price, the same as in the June quarter 2020
� other costs and margins accounted for 37% of the average price, a decrease of 3 percentage points from the June quarter 2020.
Other costs and margins make up a relatively large proportion of the retail price for LPG compared with those for petrol and diesel because of the higher transportation and storage costs for LPG, and the lower rate of excise.51
51 As noted in section 1.8, excise on petrol and diesel is 42.3 cpl and excise on automotive LPG is 13.8 cpl.
50 Report on the Australian petroleum market—September quarter 2020
Chart 7.4: Components of the average retail LPG price in the five largest cities in the September quarter 2020
Other costs and marginsTaxesSaudi CP
76.9 cpl
LPG
37 28.6
20.8
27.5
27
36
cpl%
Source: ACCC calculations based on data from FUELtrac, Reuters, RBA and ATO.
51 Report on the Australian petroleum market—September quarter 2020
Appendix A: Petrol price cycles and GIRDs in Sydney and Adelaide in the year to 30 September 2020Chapter 4 noted that the shape of the petrol price cycle in the five largest cities changed in March 2020 after TGPs decreased sharply. In Sydney, Melbourne, Brisbane and Adelaide, the price cycle generally became longer in duration and did not get as close to TGPs as they had previously at the trough price. In Perth, while regular weekly price cycles continued, they also did not get as close to TGPs as they had previously at the trough price, and there was an increase in the average trough to peak price increase.
Chapter 4 included charts showing daily average retail petrol prices, TGPs and GIRDs in Melbourne, Brisbane and Perth. Charts A1 and A2 show daily average retail petrol prices, TGPs and GIRDs in Sydney and Adelaide respectively in the year to 30 September 2020.
Chart A.1: Daily average retail petrol prices, TGPs and GIRDs in Sydney: 1 October 2019 to 30 September 2020
cpl
GIRDsRetail prices TGPs
Oct
–19
No
v–19
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–20
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
-10
10
30
50
70
90
110
130
150
170
190
Source: ACCC calculations based on data from FUELtrac, Ampol, BP, Mobil and Viva Energy.
52 Report on the Australian petroleum market—September quarter 2020
Chart A.2: Daily average retail petrol prices, TGPs and GIRDs in Adelaide: 1 October 2019 to 30 September 2020
cpl
GIRDsRetail prices TGPs
Oct
–19
No
v–19
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–20
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
-10
10
30
50
70
90
110
130
150
170
190
Source: ACCC calculations based on data from FUELtrac, Ampol, BP, Mobil and Viva Energy.
53 Report on the Australian petroleum market—September quarter 2020
Appendix B: Petrol price data for monitored locationsThe ACCC monitors fuel prices in all capital cities and over 190 regional locations across Australia. Table B1 shows monthly average retail petrol prices for June 2020 and September 2020, and the change in price between the two months.52 The table also shows the differential between average petrol prices in the five largest cities and each regional location in the month of September 2020 and financial year 2019–20.53
Table B1: Monthly average petrol prices in June and September 2020, and city–country differentials in the month of September 2020 and 2019–20—cpl
Location June 2020 Sept 2020 Change June 2020 to Sept 2020
Differential Sept 2020
Differential 2019–20
Sydney 117.5 117.5 0.0
Melbourne 119.3 128.9 9.6
Brisbane 122.5 124.5 2.0
Adelaide 118.2 119.1 0.9
Perth 114.7 117.5 2.8
Five largest cities 118.4 121.5 3.1Hobart 122.0 124.2 2.2 2.7 13.2
Canberra 115.5 122.5 7.0 1.0 4.2
Darwin 111.8 117.0 5.2 -4.5 -0.8
New South Wales
Albury 117.0 116.0 -1.0 -5.5 -0.7
Armidale 114.7 120.0 5.3 -1.5 4.7
Ballina 121.8 120.9 -0.9 -0.6 8.3
Batemans Bay 118.5 120.6 2.1 -0.9 8.0
Bathurst 117.5 115.1 -2.4 -6.4 -5.0
Bega 129.9 129.9 0.0 8.4 11.1
Broken Hill 125.2 125.8 0.6 4.3 9.4
Bulahdelah 119.5 116.7 -2.8 -4.8 5.0
Casino 114.2 119.9 5.7 -1.6 2.0
Central Coast 121.4 126.9 5.5 5.4 3.0
Coffs Harbour 115.3 119.9 4.6 -1.6 4.8
Cooma 119.4 122.7 3.3 1.2 9.1
Coonabarabran 112.8 118.9 6.1 -2.6 5.4
Cootamundra 122.9 122.1 -0.8 0.6 5.7
Cowra 119.3 121.9 2.6 0.4 5.3
Deniliquin 122.5 122.5 0.0 1.0 9.9
Dubbo 116.2 116.6 0.4 -4.9 3.9
Forbes 125.1 124.9 -0.2 3.4 5.5
Forster 119.0 118.9 -0.1 -2.6 6.8
Gilgandra 113.4 119.9 6.5 -1.6 3.2
Glen Innes 123.6 123.8 0.2 2.3 3.8
Goulburn 111.1 118.0 6.9 -3.5 -2.8
Grafton 114.0 118.4 4.4 -3.1 3.0
52 For a price to be included in the table there had to be a price observation on at least 75 per cent of days in the month/year. Fourteen locations—Buronga, Gundagai, Oberon, Tennant Creek, Blackall, Charleville, Cloncurry, Cunnamulla, Mt Isa, Normanton, Weipa, Coober Pedy, Queenstown, Corryong—did not have sufficient data for June 2020 and/or September 2020. E10 prices instead of RULP prices are reported in Sydney, Bulahdelah, Coonabarabran, Cowra, Gilgandra, Gunnedah, Ulladulla, Wellington and West Wyalong.
53 The source for all prices in this appendix is ACCC calculations based on data from FUELtrac.
54 Report on the Australian petroleum market—September quarter 2020
Location June 2020 Sept 2020 Change June 2020 to Sept 2020
Differential Sept 2020
Differential 2019–20
Griffith 112.7 115.4 2.7 -6.1 2.0
Gunnedah 113.4 112.7 -0.7 -8.8 -1.6
Hay 117.9 118.2 0.3 -3.3 6.9
Inverell 116.9 116.2 -0.7 -5.3 4.7
Jerilderie 119.9 119.9 0.0 -1.6 9.4
Kempsey 112.1 114.8 2.7 -6.7 0.4
Leeton 117.7 120.9 3.2 -0.6 4.0
Lismore 116.7 115.9 -0.8 -5.6 5.6
Lithgow 108.2 116.5 8.3 -5.0 -0.9
Merimbula 116.7 119.2 2.5 -2.3 3.3
Mittagong 117.7 117.8 0.1 -3.7 5.8
Moama 111.9 115.8 3.9 -5.7 0.5
Moree 115.0 116.5 1.5 -5.0 4.3
Moruya 107.2 114.0 6.8 -7.5 -4.4
Moss Vale 114.7 121.7 7.0 0.2 3.5
Mudgee 115.4 120.5 5.1 -1.0 7.2
Murwillumbah 121.9 138.1 16.2 16.6 13.8
Muswellbrook 112.0 110.3 -1.7 -11.2 -1.9
Narrabri 118.1 119.3 1.2 -2.2 4.8
Newcastle 122.0 124.0 2.0 2.5 2.6
Nowra 107.4 112.8 5.4 -8.7 -2.5
Nyngan 115.4 117.3 1.9 -4.2 3.4
Orange 118.3 110.4 -7.9 -11.1 -2.7
Parkes 129.1 129.5 0.4 8.0 8.5
Port Macquarie 120.8 122.3 1.5 0.8 8.7
Queanbeyan 113.8 116.5 2.7 -5.0 1.5
Singleton 121.2 117.2 -4.0 -4.3 -2.6
Tamworth 110.3 114.2 3.9 -7.3 -2.5
Taree 118.5 119.9 1.4 -1.6 3.8
Temora 123.8 123.9 0.1 2.4 8.5
Tumut 123.3 123.2 -0.1 1.7 7.4
Tweed Heads South 124.4 132.2 7.8 10.7 1.3
Ulladulla 117.7 117.9 0.2 -3.6 3.3
Wagga Wagga 116.8 121.7 4.9 0.2 4.4
Wauchope 117.0 119.9 2.9 -1.6 6.4
Wellington 113.2 117.9 4.7 -3.6 0.0
West Wyalong 111.8 114.2 2.4 -7.3 5.1
Wollongong 125.4 125.1 -0.3 3.6 7.4
Yass 114.7 120.7 6.0 -0.8 4.5
Northern Territory
Alice Springs 128.9 129.1 0.2 7.6 16.9
Katherine 118.6 117.7 -0.9 -3.8 4.9
Queensland
Atherton 114.2 119.9 5.7 -1.6 6.0
Ayr 113.6 110.4 -3.2 -11.1 -1.1
Biloela 119.9 119.9 0.0 -1.6 8.3
Blackwater 114.1 119.9 5.8 -1.6 13.3
Bowen 115.3 116.4 1.1 -5.1 1.7
Bundaberg 109.0 109.1 0.1 -12.4 -5.6
Caboolture 123.1 118.3 -4.8 -3.2 2.3
Cairns 117.0 119.4 2.4 -2.1 2.1
55 Report on the Australian petroleum market—September quarter 2020
Location June 2020 Sept 2020 Change June 2020 to Sept 2020
Differential Sept 2020
Differential 2019–20
Charters Towers 118.0 121.9 3.9 0.4 6.3
Childers 115.7 118.8 3.1 -2.7 1.2
Dalby 117.5 125.9 8.4 4.4 0.4
Emerald 133.8 133.9 0.1 12.4 11.1
Gladstone 112.8 111.1 -1.7 -10.4 -3.1
Gold Coast 118.8 121.6 2.8 0.1 0.1
Goondiwindi 108.1 108.6 0.5 -12.9 -4.4
Gympie 113.6 115.1 1.5 -6.4 -4.6
Hervey Bay 116.6 115.8 -0.8 -5.7 -0.6
Ingham 115.6 121.1 5.5 -0.4 4.3
Innisfail 114.3 120.6 6.3 -0.9 2.5
Ipswich 122.4 123.7 1.3 2.2 0.7
Kingaroy 107.0 114.2 7.2 -7.3 -1.5
Longreach 132.1 131.9 -0.2 10.4 15.6
Mackay 116.3 117.0 0.7 -4.5 2.7
Mareeba 124.3 124.8 0.5 3.3 8.2
Maryborough 113.2 112.9 -0.3 -8.6 -3.8
Miles 105.7 108.0 2.3 -13.5 -5.6
Moranbah 108.2 117.1 8.9 -4.4 0.9
Rockhampton 116.1 116.0 -0.1 -5.5 2.4
Roma 116.9 119.9 3.0 -1.6 -2.6
Sunshine Coast 115.6 118.2 2.6 -3.3 -0.3
Toowoomba 120.9 134.2 13.3 12.7 -3.3
Townsville 116.0 114.1 -1.9 -7.4 0.1
Tully 110.8 119.9 9.1 -1.6 5.2
Warwick 122.4 121.1 -1.3 -0.4 0.0
Whitsunday 108.7 109.8 1.1 -11.7 -5.7
Yeppoon 115.2 120.2 5.0 -1.3 3.0
South Australia
Bordertown 112.7 117.9 5.2 -3.6 3.5
Ceduna 120.8 119.7 -1.1 -1.8 7.1
Clare 108.1 114.2 6.1 -7.3 -2.5
Gawler 119.5 122.4 2.9 0.9 3.6
Kadina 114.0 116.0 2.0 -5.5 -1.3
Keith 113.8 118.7 4.9 -2.8 5.1
Loxton 112.4 115.0 2.6 -6.5 0.6
Mt Gambier 115.3 117.6 2.3 -3.9 -0.5
Murray Bridge 113.5 117.0 3.5 -4.5 -2.2
Naracoorte 116.4 119.2 2.8 -2.3 5.1
Port Augusta 115.6 120.9 5.3 -0.6 7.1
Port Lincoln 115.5 118.7 3.2 -2.8 3.5
Port Pirie 112.3 116.8 4.5 -4.7 -1.6
Renmark 117.2 117.3 0.1 -4.2 3.5
Tailem Bend 113.1 119.3 6.2 -2.2 3.2
Victor Harbour 115.2 119.3 4.1 -2.2 5.0
Whyalla 115.9 118.1 2.2 -3.4 2.0
Tasmania Burnie 119.5 120.1 0.6 -1.4 9.3
Campbell Town 120.8 125.6 4.8 4.1 12.1
Devonport 120.4 125.4 5.0 3.9 10.7Huonville 119.8 122.8 3.0 1.3 9.2
56 Report on the Australian petroleum market—September quarter 2020
Location June 2020 Sept 2020 Change June 2020 to Sept 2020
Differential Sept 2020
Differential 2019–20
Launceston 123.7 126.8 3.1 5.3 14.0
New Norfolk 122.1 126.6 4.5 5.1 13.1
Smithton 118.6 121.5 2.9 0.0 7.9
Sorell 120.2 120.8 0.6 -0.7 11.6
Ulverstone 120.8 125.7 4.9 4.2 10.6
Wynyard 121.1 123.3 2.2 1.8 10.3
Victoria Ararat 114.0 118.5 4.5 -3.0 3.9
Bairnsdale 109.6 111.0 1.4 -10.5 -2.4
Ballarat 109.3 110.6 1.3 -10.9 -6.1
Benalla 113.1 115.8 2.7 -5.7 1.4
Bendigo 112.7 114.1 1.4 -7.4 -1.1
Cobram 116.2 119.7 3.5 -1.8 4.4
Colac 107.9 112.9 5.0 -8.6 -2.1
Echuca 112.1 115.8 3.7 -5.7 0.4
Euroa 114.6 121.1 6.5 -0.4 7.0
Geelong 115.0 116.0 1.0 -5.5 -4.0
Hamilton 109.3 112.1 2.8 -9.4 -1.1
Horsham 115.2 119.1 3.9 -2.4 3.6
Koo Wee Rup 125.4 136.3 10.9 14.8 2.7
Kyabram 114.3 118.6 4.3 -2.9 4.6
Lakes Entrance 113.1 112.8 -0.3 -8.7 0.6
Leongatha 110.7 114.2 3.5 -7.3 -4.1
Mansfield 114.5 119.9 5.4 -1.6 4.3
Mildura 112.8 117.6 4.8 -3.9 3.1
Moe 109.0 111.8 2.8 -9.7 -1.4
Morwell 108.6 111.6 3.0 -9.9 -3.3
Portland 108.5 111.3 2.8 -10.2 -6.2
Sale 115.8 118.0 2.2 -3.5 5.1
Seymour 117.7 132.1 14.4 10.6 3.6
Shepparton 114.9 119.9 5.0 -1.6 -0.4
Swan Hill 117.9 117.9 0.0 -3.6 6.7
Traralgon 112.2 115.1 2.9 -6.4 -0.8
Wallan 117.4 127.4 10.0 5.9 1.2
Wangaratta 113.6 115.9 2.3 -5.6 -0.2
Warrnambool 107.0 109.5 2.5 -12.0 0.7
Wodonga 112.2 118.8 6.6 -2.7 -0.2
Wonthaggi 112.0 117.7 5.7 -3.8 1.5
Yarrawonga 114.4 119.9 5.5 -1.6 5.4
Western Australia Albany 108.4 112.4 4.0 -9.1 -2.2
Boulder 123.9 122.0 -1.9 0.5 10.7
Bridgetown 121.3 120.1 -1.2 -1.4 6.5
Broome 136.1 136.6 0.5 15.1 21.7
Bunbury 119.6 117.5 -2.1 -4.0 3.3
Busselton 117.4 116.1 -1.3 -5.4 2.9
Carnarvon 123.3 125.2 1.9 3.7 13.8
Collie 105.5 111.4 5.9 -10.1 1.0
Dongara 124.7 126.0 1.3 4.5 9.9
Esperance 125.3 124.2 -1.1 2.7 12.1
Eucla 133.3 139.7 6.4 18.2 22.4
57 Report on the Australian petroleum market—September quarter 2020
Location June 2020 Sept 2020 Change June 2020 to Sept 2020
Differential Sept 2020
Differential 2019–20
Geraldton 124.7 125.4 0.7 3.9 7.2
Kalgoorlie 123.7 118.6 -5.1 -2.9 10.6
Karratha 139.8 138.5 -1.3 17.0 22.9
Manjimup 119.9 119.4 -0.5 -2.1 2.9
Mount Barker 108.1 112.4 4.3 -9.1 -1.7
Port Hedland 136.8 136.9 0.1 15.4 20.9
Waroona 113.0 117.6 4.6 -3.9 -2.5
58 Report on the Australian petroleum market—September quarter 2020
Appendix C: Update on regional market studiesThe ACCC undertook four regional petrol market studies between 2015 and 2017. These studies examined petrol markets in Darwin, Launceston, Armidale and Cairns. Following the completion of those studies, the ACCC continues to monitor prices and developments in those locations to assess changes in competition over time.
Table C1 shows average retail petrol prices and GIRDs for each location, and a comparison with those in the five largest cities in aggregate, in the September quarter 2020.
Table C1: Quarterly average retail petrol prices and GIRDs in Darwin, Launceston, Armidale, Cairns and the five largest cities—September quarter 2020—cpl
Darwin Launceston Armidale CairnsFive largest
citiesRetail prices
Average price: September quarter 2020 118.0 126.9 118.5 120.0 122.1
Change from June quarter 2020 2.0 1.5 3.0 3.8 13.1Difference from five largest cities: September quarter 2020
-4.1 4.8 -3.6 -2.1 -
Change from June quarter 2020 -11.1 -11.6 -10.1 -9.3 -GIRDsAverage GIRDs: September quarter 2020 9.8 18.6 14.1 13.8 18.7Change from June quarter 2020 -9.6 -8.1 -6.8 -5.9 2.8Difference from five largest cities: September quarter 2020
-8.9 -0.1 -4.6 -4.9 -
Change from June quarter 2020 -12.4 -10.9 -9.6 -8.7 -
Source: ACCC calculations based on data from FUELtrac, Ampol, BP, Mobil, Viva Energy and WA FuelWatch.
Notes: All prices are for RULP except Armidale (which is E10).
Hobart TGPs are used as a proxy for TGPs in Launceston.
Sydney and Brisbane E10 TGPs are used as a proxy for Armidale TGPs.
DarwinThe ACCC’s report on the Darwin petrol market was released in November 2015.54 It found that the increase in retail petrol margins in Darwin in 2012–13 and 2013–14 had imposed a significant cost on motorists. The report noted that higher prices and profits in Darwin were the result of weak retail competition.
Darwin prices increased marginally in the quarterChart C1 shows quarterly average retail petrol prices in Darwin and the five largest cities over a three-year period from the December quarter 2017 to the September quarter 2020.
54 ACCC, Report on the Darwin petrol market, 23 November 2015, at: https://www.accc.gov.au/publications/petrol-market-studies/report-on-the-darwin-petrol-market.
59 Report on the Australian petroleum market—September quarter 2020
Chart C1: Quarterly average retail petrol prices in Darwin and the five largest cities: December quarter 2017 to September quarter 2020
100
110
120
130
140
150
160
170D
ec–1
7
Mar
–18
Jun
–18
Sep
–18
Dec
–18
Mar
–19
Jun
–19
Sep
–19
Dec
–19
Mar
–20
Jun
–20
Sep
–20
cpl
Darwin Five largest cities
Source: ACCC calculations based on data from FUELtrac.
In the September quarter 2020, average retail prices in Darwin were 118.0 cpl, an increase of 2.0 cpl from the June quarter 2020 (116.0 cpl). This was significantly less than the increase in the five largest cities (13.1 cpl).
The quarterly average price in Darwin in the September quarter 2020 was 4.1 cpl lower than the five largest cities, a decrease of 11.1 cpl in the differential between the two from the June quarter 2020 (when the Darwin average price was 7.0 cpl higher than the five largest cities).
The market study noted that the average differential between prices in Darwin and the five largest cities in 2012–13 and 2013–14 was over 19.0 cpl. Since then it has decreased significantly.
Darwin prices remained below a long-term competitive cost-based priceThe ACCC’s 2015 Darwin report noted that motorists were paying around 10.0 cpl more than they should have been in a competitive market. This was based on a comparison of GIRDs in Darwin with those in the larger capital cities.
Chart C2 shows Darwin petrol prices on a rolling annual average basis from 1 January 2015 to 30 September 2020. Each daily price in the chart is the average of that day’s price and prices on the previous 364 days. Analysis of prices over the long term enables short-term influences (such as lags in regional price movements) to be smoothed out.
The chart also shows estimated Darwin prices calculated on a long-term cost basis. This calculation reflects the fact that costs (such as freight and operating costs on a per litre basis) are higher in Darwin, and assumes that retail margins in Darwin should be broadly similar to long-term average retail margins in the five largest cities. This long-term competitive cost-based price provides a benchmark against which to compare current price levels. It is not static and will change as its underlying elements change over time. If retail prices are constantly above this benchmark price for a sustained period this may be indicative of a less-competitive market, in which retailers are earning higher margins at the expense of consumers.
60 Report on the Australian petroleum market—September quarter 2020
Chart C2: Rolling annual average retail petrol prices and a long-term competitive cost-based price in Darwin, and the difference: 1 January 2015 to 30 September 2020
-10
0
10
20
30
40
50
60
70
100
110
120
130
140
150
160
170
180Ja
n–1
5
Ap
r–1
5
Jul–
15
Oct
–15
Jan
–16
Ap
r–1
6
Jul–
16
Oct
–16
Jan
–17
Ap
r–1
7
Jul–
17
Oct
–17
Jan
–18
Ap
r–1
8
Jul–
18
Oct
–18
Jan
–19
Ap
r–1
9
Jul–
19
Oct
–19
Jan
–20
Ap
r–2
0
Jul–
20
Oct
–20
cpl
cpl
ACCC report released 23 November 2015
ACCC announces Darwin market study 10 March 2015
Di�erence (RHS)Retail prices (LHS) Competitive cost-based prices (LHS)
Source: ACCC calculations based on data from FUELtrac, Informed Sources and the companies that participated in the Darwin market study.
Notes: A rolling annual average price is the average of that day’s price and prices on the previous 364 days.
A long-term competitive cost-based price assumes that retail margins in Darwin should be broadly similar to long-term average retail margins in the five largest cities.
The chart indicates that rolling annual average petrol prices in Darwin in the September quarter 2020 remained below a competitive cost-based price, as they have been since mid-2019.
As noted in the ACCC’s Report on the Australian petroleum market—September quarter 2019, the relatively low retail prices in Darwin in recent quarters may have been influenced by:55
� the opening of a second FuelXpress retail site in Palmerston in August 2019
� the change in price setter at Coles Express retail sites from 1 March 2019.
Motorists in Darwin may have become more aware of these changes in pricing behaviour in the Darwin market through information available from the fuel price transparency scheme in the Northern Territory (MyFuel NT).
Darwin GIRDs decreased in the quarterChart C3 shows quarterly average GIRDs in Darwin and the five largest cities from the December quarter 2017 to the September quarter 2020. GIRDs in Darwin have decreased in recent years since the peak of 30.6 cpl in the September quarter 2014.
55 ACCC, Report on the Australian petroleum market—September quarter 2019, p. 2, at: https://www.accc.gov.au/publications/quarterly-reports-on-the-australian-petroleum-industry/quarterly-report-on-the-australian-petroleum-market-september-quarter-2019.
61 Report on the Australian petroleum market—September quarter 2020
Chart C3: Quarterly average petrol GIRDs in Darwin and the five largest cities: December quarter 2017 to September quarter 2020
0
5
10
15
20
25
30D
ec–1
7
Mar
–18
Jun
–18
Sep
–18
Dec
–18
Mar
–19
Jun
–19
Sep
–19
Dec
–19
Mar
–20
Jun
–20
Sep
–20
cpl
Darwin Five largest cities
Source: ACCC calculations based on data from FUELtrac, AIP, Ampol, BP, Mobil, Viva Energy and WA FuelWatch.
In the September quarter 2020, Darwin GIRDs were 9.8 cpl, a decrease of 9.6 cpl from the June quarter 2020 (19.4 cpl). Darwin GIRDs in the September quarter 2020 were 8.9 cpl lower than GIRDs in the five largest cities (18.7 cpl). GIRDs in Darwin have been below GIRDs in the five largest cities in all but one quarter since the March quarter 2019.
Darwin retail prices since the introduction of MyFuel NTThe MyFuel NT scheme commenced on 1 November 2017. It is a territory-wide real-time mandatory retail fuel price reporting scheme, which gives consumers access (via website or mobile app) to live price data from every fuel retailer in the NT. MyFuel NT is similar to the FuelCheck scheme in NSW and the FuelCheck scheme introduced in Tasmania.
Chart C4 shows daily average petrol prices and TGPs (lagged by five days) in Darwin over the period 1 September 2017 to 30 September 2020.
62 Report on the Australian petroleum market—September quarter 2020
Chart C4: Daily average retail petrol prices and TGPs in Darwin: 1 September 2017 to 30 September 2020
80
90
100
110
120
130
140
150
160
170S
ep–1
7
Dec
–17
Mar
–18
Jun
–18
Sep
–18
Dec
–18
Mar
–19
Jun
–19
Sep
–19
Dec
–19
Mar
–20
Jun
–20
Sep
–20
cpl
Retail prices TGPs (lagged five days)
MyFuel NT introduced 1 November 2017
Source: ACCC calculations based on data from FUELtrac and AIP.
Note: TGPs are lagged by five days as there is a time lag between changes in TGPs and changes in retail prices.
Daily average retail petrol prices in Darwin increased significantly prior to the introduction of MyFuel NT, following an increase in TGPs. However, the increase in retail prices (around 11.0 cpl) was larger than the increase in TGPs (around 8.0 cpl) and occurred immediately. Retail prices increased in mid-November 2017 by 5.0 cpl, and again in early December 2017 by a further 4.0 cpl to around 149.0 cpl.
Daily average retail petrol prices in Darwin were 118.8 cpl at the beginning of the September quarter 2020 and decreased slowly to 116.3 cpl at the end of the quarter. Daily average TGPs were 111.4 cpl at the beginning of the quarter, decreased to a low of 105.6 cpl and ended the quarter at 108.6 cpl.
Motorists can use the MyFuel NT scheme to identify the highest and lowest priced retail sites in Darwin. For example, on 12 November 2020, it showed that there was a range of 19.0 cpl between the highest priced retail site in Darwin (117.9 cpl at a BP site) and the lowest (98.9 at a United and a BP site).
LauncestonThe ACCC report on the Launceston petrol market was released in July 2016.56 It found that between 2012–13 and the first half of 2015–16, Launceston motorists paid on average around 12 cpl more for petrol than motorists in the five largest cities. The report noted that if the Launceston market was more competitive, motorists could expect savings of 4.0 cpl to 5.0 cpl on a sustainable basis. The three main factors causing higher prices in Launceston were higher transport costs, higher wholesale operating costs and margins, and higher retail operating costs and margins.
Launceston prices increased in the quarterChart C5 shows quarterly average retail petrol prices in Launceston and the five largest cities over a three-year period from the December quarter 2017 to the September quarter 2020.
56 ACCC, Report on the Launceston petrol market, 20 July 2016, at: https://www.accc.gov.au/publications/petrol-market-studies/report-on-the-launceston-petrol-market.
63 Report on the Australian petroleum market—September quarter 2020
Chart C5: Quarterly average retail petrol prices in Launceston and the five largest cities: December quarter 2017 to September quarter 2020
100
110
120
130
140
150
160
170D
ec–1
7
Mar
–18
Jun
–18
Sep
–18
Dec
–18
Mar
–19
Jun
–19
Sep
–19
Dec
–19
Mar
–20
Jun
–20
Sep
–20
cpl
Launceston Five largest cities
Source: ACCC calculations based on data from FUELtrac.
In the September quarter 2020, average retail petrol prices in Launceston were 126.9 cpl, an increase of 1.5 cpl from the June quarter 2020 (125.4 cpl). The average differential between prices in Launceston and the five largest cities was 4.8 cpl, a decrease of 11.6 cpl from the June quarter 2020 (16.4 cpl).
Launceston prices remained substantially above a long-term competitive cost-based priceChart C6 shows Launceston petrol prices on a rolling annual average basis and estimated Launceston prices calculated on a long-term competitive cost basis from 1 January 2015 to 30 September 2020. These prices have been calculated on the same basis as outlined for Darwin.
The chart shows that rolling annual average petrol prices in Launceston remained substantially above a rolling long-term competitive cost-based price in the September quarter 2020. The significantly high differential may reflect the absence of vigorous and effective competition in Launceston.
64 Report on the Australian petroleum market—September quarter 2020
Chart C6: Rolling annual average retail petrol prices and a long-term competitive cost-based price in Launceston, and the difference: 1 January 2015 to 30 September 2020
–10
0
10
20
30
40
50
60
70
100
110
120
130
140
150
160
170
180Ja
n–1
5
Ap
r–1
5
Jul–
15
Oct
–15
Jan
–16
Ap
r–1
6
Jul–
16
Oct
–16
Jan
–17
Ap
r–1
7
Jul–
17
Oct
–17
Jan
–18
Ap
r–1
8
Jul–
18
Oct
–18
Jan
–19
Ap
r–1
9
Jul–
19
Oct
–19
Jan
–20
Ap
r–2
0
Jul–
20
Oct
–20
cpl
cpl
ACCC report released 20 July 2016
ACCC announces Launceston market study 10 May 2015
Di�erence (RHS)Retail prices (LHS) Competitive cost-based prices (LHS)
Source: ACCC calculations based on data from FUELtrac, Informed Sources and the companies that participated in the Launceston market study.
Notes: A rolling annual average price is the average of that day’s price and prices on the previous 364 days.
A long-term competitive cost-based price assumes that retail margins in Launceston should be broadly similar to long-term average retail margins in the five largest cities.
On 18 September 2020, the Tasmanian Government commenced its fuel price transparency scheme—FuelCheck TAS—based on the FuelCheck scheme in NSW. Motorists can use it to identify the highest and lowest priced retail sites in Launceston. For example, on 12 November 2020, it showed that there was a 15.0 cpl range between the highest priced retail sites in Launceston (124.9 cpl at Caltex, Woolworths, Coles Express and BP sites) and the lowest (109.9 cpl at an independent site, Tas Petroleum Launceston).
Launceston GIRDs decreased in the quarterChart C7 shows quarterly average GIRDs in Launceston and the five largest cities from the December quarter 2017 to the September quarter 2020.
65 Report on the Australian petroleum market—September quarter 2020
Chart C7: Quarterly average petrol GIRDs in Launceston and the five largest cities: December quarter 2017 to September quarter 2020
0
5
10
15
20
25
30D
ec–1
7
Mar
–18
Jun
–18
Sep
–18
Dec
–18
Mar
–19
Jun
–19
Sep
–19
Dec
–19
Mar
–20
Jun
–20
Sep
–20
cpl
Launceston Five largest cities
Source: ACCC calculations based on data from FUELtrac, AIP, Ampol, BP, Mobil, Viva Energy and WA FuelWatch.
Note: Hobart TGPs are used as a proxy for TGPs in Launceston.
In the September quarter 2020, Launceston GIRDs were 18.6 cpl, a decrease of 8.1 cpl from the June quarter 2020 (26.7 cpl). Launceston GIRDs in the September quarter 2020 were 0.1 cpl lower than GIRDs in the five largest cities (18.7 cpl).
ArmidaleThe ACCC report on the Armidale petrol market was released in November 2016.57 It found that relatively weak retail competition in Armidale, reflected by a lack of price discounting, contributed to E10 prices in Armidale being on average 8.0 cpl higher than RULP prices in the five largest cities between 2012–13 and 2014–15.
Armidale petrol prices increased in the quarterChart C8 shows quarterly average retail petrol prices in Armidale and the five largest cities over a three-year period from the December quarter 2017 to the September quarter 2020.
57 ACCC, Report on the Armidale petrol market, 21 November 2016, at: https://www.accc.gov.au/publications/petrol-market-studies/report-on-the-armidale-petrol-market. References to petrol prices in Armidale in this appendix are to E10 prices. Armidale prices in appendix B are RULP prices.
66 Report on the Australian petroleum market—September quarter 2020
Chart C8: Quarterly average retail petrol prices in Armidale and the five largest cities: December quarter 2017 to September quarter 2020
100
110
120
130
140
150
160
170D
ec–1
7
Mar
–18
Jun
–18
Sep
–18
Dec
–18
Mar
–19
Jun
–19
Sep
–19
Dec
–19
Mar
–20
Jun
–20
Sep
–20
cpl
Armidale Five largest cities
Source: ACCC calculations based on data from FUELtrac.
In the September quarter 2020, average retail petrol prices in Armidale were 118.5 cpl, an increase of 3.0 cpl from the June quarter 2020 (115.5 cpl). The quarterly average price in Armidale in the September quarter 2020 was 3.6 cpl lower than the five largest cities, a decrease of 10.1 cpl in the differential between the two from the June quarter 2020 (when Armidale prices were 6.5 cpl higher than prices in the five largest cities).
Armidale prices were above a long-term competitive cost-based priceChart C9 shows Armidale petrol prices on a rolling annual average basis and estimated Armidale prices calculated on a long-term competitive cost basis from 1 January 2015 to 30 September 2020. These prices have been calculated on the same basis as outlined for Darwin.
The chart indicates that rolling annual average petrol prices in Armidale were above a rolling long-term competitive cost-based price in the September quarter 2020.
67 Report on the Australian petroleum market—September quarter 2020
Chart C9: Rolling annual average retail prices and a long-term competitive cost-based price in Armidale, and the difference: 1 January 2015 to 30 September 2020
-10
0
10
20
30
40
50
60
70
100
110
120
130
140
150
160
170
180Ja
n–1
5
Ap
r–1
5
Jul–
15
Oct
–15
Jan
–16
Ap
r–1
6
Jul–
16
Oct
–16
Jan
–17
Ap
r–1
7
Jul–
17
Oct
–17
Jan
–18
Ap
r–1
8
Jul–
18
Oct
–18
Jan
–19
Ap
r–1
9
Jul–
19
Oct
–19
Jan
–20
Ap
r–2
0
Jul–
20
Oct
–20
cpl
cpl
Di�erence (RHS)Retail prices (LHS) Competitive cost-based prices (LHS)
ACCC report released 21 November 2016
ACCC announces Armidale market study 3 August 2015
Source: ACCC calculations based on data from, FUELtrac, Informed Sources and the companies that participated in the Armidale market study.
Notes: A rolling annual average price is the average of that day’s price and prices on the previous 364 days.
A long-term competitive cost-based price assumes that retail margins in Armidale should be broadly similar to long-term average retail margins in the five largest cities.
Motorists in Armidale can use the FuelCheck website and app to identify the highest and lowest priced retail sites in Armidale. For example, on 12 November 2020, the FuelCheck website showed that there was a 4.9 cpl range between the highest priced RULP retail site in Armidale (115.9 cpl at Caltex Armidale) and the lowest (111.0 cpl at Beardy Street Servo). There was a 1.0 cpl range between the highest priced E10 retail site (114.9 cpl at a Coles Express site) and the lowest (113.9 cpl at Lowes, Woolworths and Caltex sites).
Armidale GIRDs decreased in the quarterChart C10 shows quarterly average GIRDs in Armidale and the five largest cities from the December quarter 2017 to the September quarter 2020.
68 Report on the Australian petroleum market—September quarter 2020
Chart C10: Quarterly average petrol GIRDs in Armidale and the five largest cities: December quarter 2017 to September quarter 2020
0
5
10
15
20
25
30D
ec–1
7
Mar
–18
Jun
–18
Sep
–18
Dec
–18
Mar
–19
Jun
–19
Sep
–19
Dec
–19
Mar
–20
Jun
–20
Sep
–20
cpl
Armidale Five largest cities
Source: ACCC calculations based on data from FUELtrac, Ampol, BP, Mobil, Viva Energy and WA FuelWatch data.
Note: Sydney and Brisbane E10 TGPs from monitored companies are used as a proxy for Armidale TGPs.
In the September quarter 2020, average GIRDs in Armidale were 14.1 cpl, a decrease of 6.8 cpl from the June quarter 2020 (20.9 cpl). Armidale GIRDs in the September quarter 2020 were 4.6 cpl lower than the five largest cities (18.7 cpl).
CairnsThe ACCC report on the Cairns petrol market was released in May 2017.58 It found that between 2012–13 and the first half of 2016–17, the average differential between prices in Cairns and the five largest cities was around 11.0 cpl. It concluded that a lack of vigorous and effective retail price competition in Cairns contributed to the increase in retail margins and profits.
Cairns petrol prices increased in the quarterChart C11 shows quarterly average retail petrol prices in Cairns and the five largest cities over a three-year period from the December quarter 2017 to the September quarter 2020.
58 ACCC, Report on the Cairns petrol market, 29 May 2017, at: https://www.accc.gov.au/publications/petrol-market-studies/report-on-the-cairns-petrol-market.
69 Report on the Australian petroleum market—September quarter 2020
Chart C11: Quarterly average retail petrol prices in Cairns and the five largest cities: December quarter 2017 to September quarter 2020
100
110
120
130
140
150
160
170D
ec–1
7
Mar
–18
Jun
–18
Sep
–18
Dec
–18
Mar
–19
Jun
–19
Sep
–19
Dec
–19
Mar
–20
Jun
–20
Sep
–20
cpl
Cairns Five largest cities
Source: ACCC calculations based on data from FUELtrac.
In the September quarter 2020, the average retail petrol price in Cairns was 120.0 cpl, an increase of 3.8 cpl from the June quarter 2020 (116.2 cpl). The quarterly average price in Cairns in the September quarter 2020 was 2.1 cpl lower than the five largest cities, a decrease of 9.3 cpl in the differential between the two from the June quarter 2020 (when Cairns prices were 7.2 cpl higher than prices in the five largest cities).
Cairns petrol prices remained above a long-term competitive cost-based priceChart C12 shows Cairns petrol prices on a rolling annual average basis and estimated Cairns prices calculated on a long-term competitive cost basis from 1 January 2015 to 30 September 2020. These prices have been calculated on the same basis as outlined for Darwin.
The chart indicates that in the September quarter 2020, rolling annual average petrol prices remained above a rolling long-term competitive cost-based price.
70 Report on the Australian petroleum market—September quarter 2020
Chart C12: Rolling annual average retail prices and a long-term competitive cost-based price in Cairns, and the difference: 1 January 2015 to 30 September 2020
Di�erence (RHS)Retail prices (LHS) Competitive cost-based prices (LHS)
–10
0
10
20
30
40
50
60
70
100
110
120
130
140
150
160
170
180Ja
n–1
5
Ap
r–1
5
Jul–
15
Oct
–15
Jan
–16
Ap
r–1
6
Jul–
16
Oct
–16
Jan
–17
Ap
r–1
7
Jul–
17
Oct
–17
Jan
–18
Ap
r–1
8
Jul–
18
Oct
–18
Jan
–19
Ap
r–1
9
Jul–
19
Oct
–19
Jan
–20
Ap
r–2
0
Jul–
20
Oct
–20
cpl
cpl
ACCC report released 30 May 2017
announces ACCCCairns market study19 April 2016
Source: ACCC calculations based on data from FUELtrac, Informed Sources and the companies that participated in the Cairns market study.
Notes: A rolling annual average price is the average of that day’s price and prices on the previous 364 days.
A long-term competitive cost-based price assumes that retail margins in Cairns should be broadly similar to long-term average retail margins in the five largest cities.
Cairns GIRDs decreased in the quarterChart C13 shows quarterly average GIRDs in Cairns and the five largest cities from the December quarter 2017 to the September quarter 2020.
Chart C13: Quarterly average petrol GIRDs in Cairns and the five largest cities: December quarter 2017 to September quarter 2020
Cairns Five largest cities
0
5
10
15
20
25
30
Dec
–17
Mar
–18
Jun
–18
Sep
–18
Dec
–18
Mar
–19
Jun
–19
Sep
–19
Dec
–19
Mar
–20
Jun
–20
Sep
–20
cpl
Source: ACCC calculations based on data from FUELtrac, Ampol, BP, Mobil, Viva Energy and FuelWatch.
In the September quarter 2020, average GIRDs in Cairns were 13.8 cpl, a decrease of 5.9 cpl from the June quarter 2020 (19.7 cpl). Cairns GIRDs in the September quarter 2020 were 4.9 cpl lower than in the five largest cities (18.7 cpl).
71 Report on the Australian petroleum market—September quarter 2020
Cairns retail prices since the introduction of the Queensland fuel price reporting trialThe Queensland fuel price reporting trial commenced on 3 December 2018. The two-year trial requires all Queensland fuel retailers to report their undiscounted fuel prices to a data aggregator, and gives consumers access to the price data via apps and websites.
Chart C14 shows daily average petrol prices and TGPs (lagged by five days) in Cairns from 1 October 2018 to 30 September 2020.
Chart C14: Daily average retail petrol prices and TGPs in Cairns: 1 October 2018 to 30 September 2020
80
90
100
110
120
130
140
150
160
170
Oct
–18
No
v–1
8
Dec
–18
Jan
–19
Feb
–19
Mar
–19
Ap
r–1
9
May
–19
Jun
–19
Jul–
19
Au
g–1
9
Sep
–19
Oct
–19
No
v–1
9
Dec
–19
Jan
–20
Feb
–20
Mar
–20
Ap
r–2
0
May
–20
Jun
–20
Jul–
20
Au
g–2
0
Sep
–20
cpl
Retail prices TGPs (lagged five days)
Qld fuel price reporting trialintroduced 3 December 2018
Source: ACCC calculations based on data from FUELtrac, Ampol, BP, Mobil and Viva Energy.
Note: TGPs are lagged by five days as there is a time lag between changes in TGPs and changes in retail prices.
Retail prices in Cairns started to decrease prior to the introduction of the Queensland fuel price reporting trial. They reached a high of 167.1 cpl in mid-November 2018, and subsequently decreased by 42.2 cpl to 124.9 cpl in early February 2019. This followed similar movements in TGPs, which reached a high of 150.8 cpl in mid-October 2018 and subsequently decreased by 35.4 cpl to a low of 115.4 cpl in early January 2019.
Daily average retail petrol prices in Cairns were 120.6 cpl at the beginning of the September quarter 2020 and slowly decreased steadily to 117.1 cpl at the end of the quarter. Daily average TGPs were 110.4 cpl at the beginning of the quarter, decreased to a low of 103.3 cpl and ended the quarter at 106.6 cpl.
Motorists in Cairns are able to access site-specific petrol price data made available by websites and app providers under the Queensland fuel price reporting trial to identify the highest and lowest priced retail sites in Cairns. For example, on 12 November 2020, using the PetrolSpy website, there was an 11.2 cpl range between the highest priced retail sites in Cairns (119.9 cpl at Coles Express, Mobil, BP and Caltex sites) and the lowest (108.7 cpl at United, Liberty and Puma sites).
