report on the australian petroleum market—september ... on the australian petrol… · 1.3 united...

Report on the Australian petroleum marketSeptember quarter 2017

November 2017

accc.gov.au

ISBN 978 1 920702 22 9

Australian Competition and Consumer Commission 23 Marcus Clarke Street, Canberra, Australian Capital Territory, 2601

© Commonwealth of Australia 2017

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.

Parties who wish to republish 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 11/17_1303

www.accc.gov.au

http://www.accc.gov.au

Contents

Key messages 1

1 Developments in the petroleum industry 6

1.1 Increase in fuel excise 6

1.2 OPEC members decreased crude oil production in August 2017 6

1.3 United Petroleum commenced selling E10 6 cpl cheaper in Queensland 6

1.4 United Petroleum is looking to import fuel into Far North Queensland 6

1.5 Price board arrangements in Queensland 7

1.6 Price board arrangements in Tasmania 7

2 ACCC activities 8

2.1 ACCC and the petrol industry 8

2.2 Activities during the September quarter 2017 8

2.3 Brisbane petrol market report 9

3 Retail petrol price movements in the capital cities 10

3.1 Retail prices over the year to September 2017 10

3.2 Retail prices compared with Mogas 95 prices 10

3.3 Gross indicative retail differences 11

3.4 Retail prices in Brisbane were the highest among the five largest cities 13

3.5 Price cycles in the five largest cities 13

3.6 Prices in the three smaller capital cities 16

3.7 Retail prices of the different petrol grades 17

4 Retail price movements in regional locations 19

4.1 Influences on regional petrol prices 19

4.2 Regional petrol prices in aggregate 19

4.3 Prices in each of the states and the Northern Territory 20

4.4 Darwin 23

4.5 Launceston 26

4.6 Armidale 28

4.7 Cairns 30

5 International price movements 32

5.1 Crude oil and refined petrol 32

5.2 AUD–USD exchange rate 34

6 Diesel and LPG prices 35

6.1 Diesel price movements 35

6.2 LPG price movements 35

Appendix A—Chairman’s speech to the Asia-Pacific Fuel Industry Forum, Melbourne, 13 September 2017 37

Appendix B—Key points from the Brisbane petrol market study 44

Appendix C—Petrol price data for monitored locations 50

1 Quarterly report on the Australian petroleum industry—September 2017

Key messages

Average retail petrol prices in the five largest cities decreased in the September quarter 2017

In the September quarter 2017 average retail petrol prices across the five largest cities (i.e. Sydney, Melbourne, Brisbane, Adelaide and Perth) were 122.5 cents per litre (cpl), a decrease of 2.7 cpl from the June quarter 2017.1 This followed a decrease of 3.9 cpl in the June quarter 2017. However, on a daily basis, prices across the five largest cities increased during the quarter, from around 116 cpl in early-July 2017 to around 131 cpl in late-September 2017.

Retail margins decreased to their lowest levels since the March quarter 2016, but they are still above their long term average levels

Gross indicative retail differences (GIRDs) are a broad indicator of retail margins. They are calculated by subtracting average wholesale prices (or terminal gate prices (TGPs)) from average retail 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.

TGPs vary across brands and across cities. TGPs reflect the wholesale price of petrol only, and exclude other retail operating costs (such as branding, transportation, and labour). As they do not include costs, GIRDs should not be confused with actual retail profits.

In the September quarter 2017 average GIRDs in the five largest cities were 10.3 cpl, a decrease of 1.4 cpl from the previous quarter (11.7 cpl). GIRDs were highest in Brisbane (12.1 cpl) and lowest in Sydney (7.5 cpl). In real terms, the September quarter 2017 average GIRDs were the lowest since the March quarter 2016 (10.1 cpl).

Despite the recent fall in average quarterly GIRDs, they still remain 2.4 cpl above their real long term average since the September quarter 2002 of 7.9 cpl.

Retail prices in Brisbane were again the highest of the five largest cities

Retail prices in Brisbane were the highest of the five largest cities in the September quarter 2017. The average retail petrol price in Brisbane in the quarter was 124.7 cpl, which was 2.7 cpl higher than the average across the other four largest cities (i.e. Sydney, Melbourne, Adelaide and Perth). This was 0.6 cpl lower than the differential in the June quarter 2017.

Since 2009–10 annual average GIRDs in Brisbane have been higher than those in the other four largest cities.

Increased transparency of fuel price data can benefit both motorists and retailers

On 13 September 2017 the Chairman of the ACCC, Mr Rod Sims, gave a speech to the Asia Pacific Fuel Industry Forum in Melbourne entitled ‘fuel price transparency and retail industry competition’.2 In it Mr Sims outlined how fuel price data from websites and apps can empower price-sensitive consumers. Those retailers which price competitively can then attract these consumers through more competitive prices to increase their sales.

Since 2016 fuel price data has been readily available to motorists from an increasing number of websites and apps. These include the MotorMouth website and app, the NSW FuelCheck website, the GasBuddy app, the NRMA app and the 7-Eleven app. These new websites and apps complement the long-established WA FuelWatch website and the Woolworths app. This information assists consumers to find the best time to buy at sites with the lowest prices.

1 In this report references to petrol are to regular unleaded petrol (RULP) unless otherwise specified.

2 A copy of the Chairman’s speech is provided in appendix A.


A current focus of the ACCC is to highlight to consumers the ability of technology to help them find where the cheapest petrol prices are, to encourage them to buy where petrol is cheapest, and to reward retailers which have the lowest prices.

By avoiding buying petrol at the peaks of the price cycle motorists can save money

Use of these apps and websites is particularly relevant to those motorists in cities with price cycles. Retail petrol prices in the five largest cities in Australia move in cycles. Price cycles do not generally occur in Canberra, Hobart and Darwin, or in most regional locations. Price cycles arise for many reasons including the competitive dynamic between fuel retailers and the pricing policies of fuel retailers.

In 2007 petrol price cycles in Sydney, Melbourne, Brisbane and Adelaide had an average length of seven or eight days. By 2016 the average length of price cycles in Melbourne and Brisbane were over a month long, while those in Adelaide were around 26 days and those in Sydney were around 22 days. In contrast, the average length of price cycles in Perth moved in the opposite direction, decreasing from 15 days in 2007 to seven days in 2016.

By avoiding buying petrol at the peak of the price cycle in these cities motorists can save money. The chart shows daily average E10 prices in Sydney over the six month period 1 April to 30 September 2017. There were six price cycles in that time. Many motorists tend to fill up once a week. If these motorists had avoided buying petrol on the six days around the six peaks during this period, they would have paid on average around 2.6 cpl less.

Daily average retail E10 prices in Sydney: 1 April 2017 to 30 September 2017

105

110

115

120

125

130

135

140

145

Peaks in red represent the six highest priced days of the cycle

Average price without peaks: 118.1 cpl

Average price:120.7 cpl

1 Apr

8 Apr

15 A

pr

22 A

pr

29 A

pr

6 May

13 M

ay

20 M

ay

27 M

ay

3 Ju

n

10 Jun

17 Jun

24 Jun

1 Ju

l

8 Ju

l

15 Jul

22 Jul

29 Jul

5 Aug

12 A

ug

19 A

ug

26 A

ug

2 Sep

9 Sep

16 Sep

23 Sep

30 Sep

cpl

Source: ACCC calculations based on FUELtrac data.

Assuming similar savings from the price cycles for RULP and premium unleaded petrol (PULP) in Sydney, as from E10 price cycles, the estimated savings overall to motorists in Sydney over a full year would be in the region of $85 million.

Undertaking the same calculations for the other larger cities gives similar results. In Melbourne average prices would have been 2.3 cpl lower, with estimated savings in the region of $75 million; in Brisbane average prices would have been 2.4 cpl lower, with estimated savings in the region of $40 million; and in Adelaide average prices would have been 3.3 cpl lower, with estimated savings in the region of $30 million. A similar analysis for Perth was not undertaken because it has regular weekly price cycles.


Motorists that can fill up less frequently and therefore buy petrol when prices are falling can save even more. For example, if motorists in Sydney avoided buying E10 on the 10 most expensive days around the peak of the price cycle, they would have paid on average 4.3 cpl less. There would be similar savings in the other cities: Melbourne 3.8 cpl, Brisbane 4.1 cpl and Adelaide 6.1 cpl.

Motorists that only buy a small amount of petrol when prices are at their peak, waiting until prices are falling before filling up, can also make significant savings.

Motorists can avoid buying petrol around the peaks by following the ACCC’s advice on its website of when to buy and, importantly, when not to buy. Consumers taking this more active approach would likely save considerably more.

There are often a range of prices across various retailers available to motorists, even at the peak of the price cycle, so they can also use the fuel price apps to decide where to buy.

International crude oil and refined petrol prices were higher but their influence was more than offset by a higher AUD–USD exchange rate

International crude oil and refined petrol prices increased during the September quarter 2017. Quarterly average Brent crude oil prices increased by around USD 2 per barrel to USD 52 per barrel, and average Mogas 95 prices (the benchmark price of refined petrol relevant to Australia) increased by USD 3 per barrel to USD 67 per barrel.

This increase in prices was influenced by the Organisation of Petroleum Exporting Countries (OPEC) led production cuts, demand from China and geo-political tensions in the Middle East. In late-2016 the OPEC and some non-OPEC countries agreed to decrease crude oil production from January 2017. The OPEC cartel met in late-September 2017 and announced that it was deferring a decision to extend the cap on production until at least January 2018. The current production cap is scheduled to expire in March 2018.

That retail prices in Australia decreased in the quarter, while international refined petrol prices increased, was due to a higher AUD–USD exchange rate in the September quarter 2017. The average AUD–USD exchange rate in the quarter was USD 0.79—around USD 0.04 higher than the June quarter 2017. The influence of the higher AUD–USD exchange rate in the quarter more than offset the increase in international refined petrol prices.

The city–country price differential was broadly stable

The ACCC monitors fuel prices in all capital cities and over 190 regional locations across Australia. The average differential between regional prices and prices in the five largest cities in the September quarter 2017 was 6.6 cpl, 0.4 cpl higher than in the June quarter 2017 (6.2 cpl). In 2016–17 the annual average differential was 5.4 cpl.

Diesel and automotive LPG prices decreased

Average retail diesel prices in the five largest cities decreased in the September quarter 2017 to 126.3 cpl, a decrease of 2.2 cpl from the June quarter 2017 (128.5 cpl).

Average retail LPG prices in the five largest cities also decreased in the September quarter 2017 to 72.2 cpl, a decrease of 1.3 cpl from the June quarter 2017 (73.5 cpl).

ACCC regional market studies

The ACCC has undertaken four regional petrol market studies—in Darwin, Launceston, Armidale and Cairns—and continues to monitor prices and GIRDs in those locations.

The ACCC has compared actual retail prices in Darwin, Launceston, Armidale and Cairns 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 per litre) are higher in these locations,


and assumes that net retail margins in these locations should be broadly similar to long-term average net 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 of time, this may reflect a less competitive market and mean that questions should be asked about those prices to local retailers.

The September quarter data shows that retail prices in Launceston, Armidale and Cairns are significantly higher than a long-term competitive cost–based benchmark suggests they should be. Motorists in those locations are encouraged to use the available fuel price apps to find retailers with relatively lower prices.

Darwin petrol prices decreased and remain around a long-term competitive cost-based price

In the September quarter 2017 average retail petrol prices in Darwin were 128.5 cpl, a decrease of 1.9 cpl from the June quarter 2017 (130.4 cpl). The average differential between prices in Darwin and the five largest cities was 6.0 cpl, an increase of 0.8 cpl from the June quarter 2017.

In the September quarter 2017 average GIRDs in Darwin were 11.7 cpl, a decrease of 0.4 cpl from the June quarter 2017 (12.1 cpl).

Petrol prices in Darwin are around a long-term competitive cost-based price.

Launceston petrol prices decreased but remain above a long-term competitive cost-based price

In the September quarter 2017 average retail petrol prices in Launceston were 138.2 cpl, a decrease of 2.9 cpl from the June quarter 2017 (141.1 cpl). The average differential between prices in Launceston and the five largest cities was 15.7 cpl, a decrease of 0.2 cpl from the June quarter 2017.

In the September quarter 2017 average GIRDs in Launceston were 20.6 cpl, a decrease of 1.6 cpl from the June quarter 2017 (22.2 cpl).

Prices in Launceston are above a long-term competitive cost-based price.

Armidale petrol prices decreased but remain above a long-term competitive cost-based price

In the September quarter 2017 average retail petrol prices in Armidale were 124.5 cpl, a decrease of 3.3 cpl from the June quarter 2017 (127.8 cpl). The average differential between prices in Armidale and the five largest cities was 2.0 cpl, a decrease of 0.6 cpl from the June quarter 2017.

In the September quarter 2017 average GIRDs in Launceston were 13.1 cpl, a decrease of 2.3 cpl from the June quarter 2017 (15.4 cpl).

Prices in Armidale are above a long-term competitive cost-based price.

Cairns petrol prices decreased but remain above a long-term competitive cost–based price

In the September quarter 2017 average retail petrol prices in Cairns were 138.1 cpl, a decrease of 1.8 cpl from the June quarter 2017 (139.9 cpl). The average differential between prices in Cairns and the five largest cities was 15.6 cpl, an increase of 0.9 cpl from the June quarter 2017.

In the September quarter 2017 average GIRDs in Cairns were 22.5 cpl, a decrease of 0.4 cpl from the June quarter 2017 (22.9 cpl).

Prices in Cairns are above a long-term competitive cost-based price.


Latest ACCC market study found that a lack of competition was driving high Brisbane prices

On 9 October 2017, the ACCC released its study into the Brisbane petrol market.3 Petrol prices in Brisbane have been significantly higher than those in the other four largest cities in Australia for many years. Between 2009–10 and 2016–17, Brisbane motorists paid on average 3.3 cpl more for petrol than motorists in the other four largest cities.

The main factor influencing the higher prices in Brisbane is higher retail margins on petrol, which have contributed to profits in Brisbane being significantly higher than the average across Australia. For example, in 2015–16 the average net profit per site in Brisbane was around 55 per cent higher than the average net profit per site across Australia.

Over the last 10 years the number of retail sites in Brisbane has been broadly stable, at around 400 sites. However, compared with Sydney, Brisbane has fewer independent chains operating in the retail market, and they do not price as aggressively.

The cost to motorists in Brisbane of higher petrol prices has been significant, at around $50 million per annum. Over the eight-year period between 2009–10 and 2016–17 the estimated cost is in the region of $400 million.

Increased transparency and promotion of vigorous and effective price competition can lead to lower petrol prices. In Brisbane there is usually a wide range of prices at retail petrol sites across the city. Readily available information about current retail petrol prices, from fuel price websites and apps, enables motorists to shop around and purchase petrol at relatively lower priced retail sites.

3 Key messages of the Brisbane report are provided in appendix B.


1 Developments in the petroleum industry

1.1 Increase in fuel excise

In the 2014–15 Budget the Australian Government announced that it would reintroduce biannual indexation, by the Consumer Price Index, of excise and excise-equivalent customs duty for all fuels except aviation fuels. Under these arrangements excise is generally increased on 1 February and 1 August each year. The announced excise changes took effect from 10 November 2014.

On 1 August 2017 excise on petrol and diesel increased by 0.2 cpl to 40.3 cpl. Excise on automotive LPG increased by 0.1 cpl to 13.2 cpl.4

1.2 OPEC members decreased crude oil production in August 2017

Crude oil production of members of OPEC fell in August 2017, after increasing each month since March 2017, as several key exporters reduced production. OPEC produced 32.76 million barrels per day (bpd) in August, a decrease of 79 100 bpd from July. OPEC has joined with other crude oil producers, including Russia, to keep 1.8 million bpd of crude oil off the market.5

OPEC and other oil producers met on 22 September 2017 in Vienna and deferred a decision to extend the production cap, that is scheduled to expire in March 2018, closer to the expiry date.6

1.3 United Petroleum commenced selling E10 6 cpl cheaper in Queensland

On 19 September 2017, the Queensland Government announced that United Petroleum would start selling E10 at 6 cpl cheaper across over 50 sites in Queensland for a limited time. United Petroleum said the discount on E10 was to support the Queensland Government’s recent biofuel mandate by encouraging motorists to make the switch to E10.7

1.4 United Petroleum is looking to import fuel into Far North Queensland

On 28 September 2017, the Queensland Government announced that Ports North and United Petroleum would work together over the next 12 months to finalise a project feasibility report and associated approvals for a fuel importation, storage and distribution facility at the Port of Mourilyan near Innisfail.8 United Petroleum has expressed interest in the development of a regional fuel facility in Far North Queensland to service the market from Airlie Beach north and west to Mt Isa. The facility could be up and running at the Port by 2020.

4 Australian Taxation Office, Excise rates for fuel, at: https://www.ato.gov.au/Business/Excise-and-excise-equivalent-goods/Fuel-excise/Excise-rates-for-fuel/, accessed on 23 October 2017.

5 CNBC, OPEC oil production falls for the first time since March, 12 September 2017, at: https://www.cnbc.com/2017/09/12/opec-oil-production-falls-for-the-first-time-since-march.html, accessed on 23 October 2017.

6 Bloomberg, OPEC and Russia Hold Steady on Cuts as Oil Market Improves, 23 September 2017, at: https://www.bloomberg.com/news/articles/2017–09–22/opec-and-allies-plan-to-wait-and-see-if-longer-oil-cuts-needed, accessed on 23 October 2017.

7 The Hon. Curtis Pitt, Queensland Treasurer and Minister for Trade and Investment, Discounted E10 Fuel now 6 cents cheaper at United Petroleum Stations, media statement, 19 September 2017, at: http://statements.qld.gov.au/Statement/2017/9/19/discounted-e10-fuel-now-6-cents-cheaper-at-united-petroleum-stations, accessed 23 October 2017.

8 The Hon. Curtis Pitt, Queensland Treasurer and Minister for Trade and Investment, $30M plan highlights Port of Mourilyan as Far North trade hub, media statement, 28 September 2017, at: http://statements.qld.gov.au/Statement/2017/9/28/30m-plan-highlights-port-of-mourilyan-as-far-north-trade-hub, accessed on 23 October 2017.

https://www.ato.gov.au/Business/Excise-and-excise-equivalent-goods/Fuel-excise/Excise-rates-for-fuel/

https://www.ato.gov.au/Business/Excise-and-excise-equivalent-goods/Fuel-excise/Excise-rates-for-fuel/

https://www.cnbc.com/2017/09/12/opec-oil-production-falls-for-the-first-time-since-march.html

https://www.cnbc.com/2017/09/12/opec-oil-production-falls-for-the-first-time-since-march.html

https://www.bloomberg.com/news/articles/2017-09-22/opec-and-allies-plan-to-wait-and-see-if-longer-oil-cuts-needed

https://www.bloomberg.com/news/articles/2017-09-22/opec-and-allies-plan-to-wait-and-see-if-longer-oil-cuts-needed

http://statements.qld.gov.au/Statement/2017/9/19/discounted-e10-fuel-now-6-cents-cheaper-at-united-petroleum-stations

http://statements.qld.gov.au/Statement/2017/9/19/discounted-e10-fuel-now-6-cents-cheaper-at-united-petroleum-stations

http://statements.qld.gov.au/Statement/2017/9/28/30m-plan-highlights-port-of-mourilyan-as-far-north-trade-hub

http://statements.qld.gov.au/Statement/2017/9/28/30m-plan-highlights-port-of-mourilyan-as-far-north-trade-hub


1.5 Price board arrangements in Queensland

On 5 August 2017, the Queensland Government announced price board regulations to commence on 31 January 2018.9

Under the Fair Trading (Fuel Price Board) Regulation 2017 all fuel retailers must show only the full price of fuel available to all motorists, instead of displaying potentially misleading or confusing prices. Fuel retailers will still be able to offer and promote discount fuel price schemes, as long as only the full undiscounted price is displayed on the fuel price board.

The regulation will also require fuel retailers to coordinate price changes on fuel price boards and fuel pumps, so when prices do change, motorists do not pay more than displayed on the fuel price board. The regulation is based on existing laws in South Australia and Victoria.

1.6 Price board arrangements in Tasmania

On 9 August 2017, the Tasmanian Government tabled the Code of Practice for Fuel Price Boards in Parliament.10 It would ensure that only normal, not discounted petrol prices are displayed on price boards at service stations. The Code was developed in consultation with the RACT, the TCCI, industry and the wider community.

On 12 September 2017 the Tasmanian Lower House passed a resolution approving the Code.11

9 The Hon. Curtis Pitt, Queensland Treasurer and Minister for Trade and Investment, Fuel price board confusion to end, media statement, 5 August 2017, at: http://statements.qld.gov.au/Statement/2017/8/5/fuel-price-board-confusion-to-end, accessed on 23 October 2017.

10 Guy Barnett, Tasmanian Minister for Building and Construction, Code to Ensure Clear Petrol Price Displays, media release, 9 August 2017, at: http://www.premier.tas.gov.au/releases/code_to_ensure_clear_petrol_price_displays, accessed on 23 October 2017.

11 Guy Barnett, Tasmanian Minister for Building and Construction, Fuel Price Boards Code of Practice approved by Lower House, media release, 12 September 2017, at: http://www.premier.tas.gov.au/releases/fuel_price_boards_code_of_practice_approved_by_lower_house, accessed on 23 October 2017.

http://statements.qld.gov.au/Statement/2017/8/5/fuel-price-board-confusion-to-end

http://www.premier.tas.gov.au/releases/code_to_ensure_clear_petrol_price_displays

http://www.premier.tas.gov.au/releases/fuel_price_boards_code_of_practice_approved_by_lower_house

http://www.premier.tas.gov.au/releases/fuel_price_boards_code_of_practice_approved_by_lower_house


2 ACCC activities

2.1 ACCC and the petrol industry

The 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 Oilcode.

Wholesale and retail petrol prices in Australia are determined by market forces. Through its petrol monitoring reports, market studies 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 September quarter 2017

2.2.1 Speech to Asia-Pacific Fuel Industry Forum

On 13 September 2017, the ACCC Chairman, Mr Rod Sims, gave a speech at the Asia-Pacific Fuel Industry Forum in Melbourne entitled ‘fuel price transparency and retail industry competition’.

The speech outlined how fuel price data from websites and apps empowers price-sensitive consumers, and helps drive more competitive markets in petrol retailing. A copy of the speech is at appendix A.

2.2.2 Submission to the Victorian Parliament Committee inquiry into regional fuel prices

On 14 September 2016, the Victorian Parliament passed a motion requiring the Economic, Education, Jobs and Skills Committee to conduct an inquiry into fuel prices in regional Victoria. The Committee is required to deliver its report to the Victorian Parliament by 31 March 2018.12

On 8 August 2017, the Chair of the Committee wrote to the ACCC inviting it to make a submission to the inquiry. The ACCC provided a submission on 21 September 2017 (a copy of which is available on the Committee website).13 The submission outlined the reasons for higher retail prices in regional locations and noted that fuel price transparency can help promote a more competitive outcome in regional locations.

2.2.3 Assessment of BP’s proposed acquisition of Woolworths Limited’s network of retail service station sites

On 10 March 2017, the ACCC commenced a review of BP Australia Pty Ltd’s (BP) proposed acquisition of Woolworths Limited’s (Woolworths) network of retail service station sites.

BP supplies fuel to approximately 1400 BP-branded service stations throughout Australia. Of these sites, BP or its agents control (and set the retail price at) 369 sites. At the remaining sites, prices are set independently by third-party site operators.

Woolworths’ retail fuel business currently operates in a co-branded alliance with Caltex Australia Petroleum Pty Ltd (Caltex)—both as a wholesale fuel customer of Caltex, and as an alliance partner with Caltex in the redemption of shopper docket fuel discounts. Woolworths’ retail fuel business currently operates 531 sites throughout Australia.

On 10 August 2017, the ACCC released a Statement of Issues. The ACCC is concerned that the proposed acquisition may substantially lessen competition by removing Woolworths as a strong competitor in fuel retailing, which has a distinct pricing strategy to BP, and which has historically been price competitive.

12 See: https://www.parliament.vic.gov.au/eejsc/inquiry/444.

13 See submission number 27 at: https://www.parliament.vic.gov.au/eejsc/article/3146.

https://www.parliament.vic.gov.au/eejsc/inquiry/444

https://www.parliament.vic.gov.au/eejsc/article/3146


The Statement of Issues sought more information on the following issues which the ACCC considers may raise competition concerns:

• the retail supply of fuel in metropolitan markets

• the retail supply of fuel in local markets

• the supply for convenience groceries.

On 19 September, the ACCC released a preliminary screening of local markets where the ACCC sought further comment from industry participants. The proposed decision date for the ACCC’s final decision is 30 November 2017.

Authorisation applications

On 28 April 2017, BP made applications for authorisation on behalf of Woolworths and BP Resellers for conduct relating to certain elements of a proposed commercial alliance between BP and Woolworths. Authorisation has been sought to allow participating BP branded service stations to accept Woolworths shopper dockets and participate in the Woolworths Rewards loyalty program.

These proposed arrangements form part of the BP proposal to acquire Woolworths’ network of service stations. The proposed shopper docket and loyalty scheme arrangements will only occur if the proposed acquisition is completed. BP and Woolworths also plan to establish a co-branded retail convenience store offering on certain BP service station sites, to be known as Metro@BP.

On 29 August 2017 the ACCC issued a draft determination proposing to grant authorisation on condition that the parties not offer fuel discounts from shopper dockets and the loyalty scheme in excess of 4 cpl in total in any single transaction.

The ACCC anticipates publishing a final determination in December 2017.

2.2.4 Stakeholder engagement and communications activity

In the September quarter 2017 the ACCC responded to fuel-related media enquiries on price and competition issues. Responses were also prepared for Ministerial and other correspondence on fuel-related competition and consumer matters, including retail price movements in regional and metropolitan locations, factors influencing different retail fuel prices in locations in the same region, and the ACCC’s current fuel monitoring activities.

In the September quarter 2017 the fuel-related pages on the ACCC website received 90 120 page views. Of this total, the petrol price cycle webpage received 83 091 page views, making it the second most viewed page on the ACCC website in the quarter.

2.3 Brisbane petrol market report

On 9 October 2017 the ACCC released its fifth market study, which examined the Brisbane petrol market. It is based on analysis of a large amount of data collected from companies that operate in Brisbane, obtained under the compulsory gathering powers of the Act. The key points of the report are provided in appendix B.


3 Retail petrol price movements in the capital cities

This chapter focuses on petrol prices across the five largest cities (Sydney, Melbourne, Brisbane, Adelaide and Perth).14 It also examines retail prices in the three smaller capital cities (Canberra, Hobart and Darwin). Petrol prices in regional locations across Australia are discussed in chapter 4.

3.1 Retail prices over the year to September 2017

Chart 3.1 shows that seven-day rolling average retail petrol prices in the five largest cities increased from 117.2 cpl in October 2016 to a high of 135.1 cpl in January 2017.15 They subsequently decreased to a low of 116.4 cpl in early-July 2017. Prices subsequently increased by 14.7 cpl to be 131.1 cpl at the end of the September quarter 2017.

Chart 3.1: Seven-day rolling average retail petrol prices in the five largest cities: 1 October 2016 to 30 September 2017

100

105

110

115

120

125

130

135

140

Oct-16

Nov

-16

Dec

-16

Jan-17

Feb

-17

Mar-17

Apr-17

May

-17

Jun-17

Jul-17

Aug

-17

Sep

-17

cpl


Note: The area to the right of the dotted vertical line in this and subsequent charts represents the September quarter 2017.

Average prices in the September quarter 2017 were 122.5 cpl, a decrease of 2.7 cpl from the June quarter 2017.

3.2 Retail prices compared with Mogas 95 prices

Retail petrol prices in Australia are primarily determined by international refined petrol prices. The relevant benchmark is the price of Singapore Mogas 95 Unleaded (Mogas 95).

Chart 3.2 shows that retail petrol prices in the five largest cities and Mogas 95 prices in Australian cents per litre moved in a broadly similar pattern in the year to September 2017.

14 From 1 July 2014 the ACCC has used E10 prices instead of RULP prices for Sydney in the average price for the five largest cities.

15 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 capital cities on price movements. This has been less effective in recent years because the duration of price cycles in most of the larger capital cities has become greater than seven days.


Chart 3.2: Monthly average retail petrol prices in the five largest cities and Mogas 95 prices: October 2016 to September 2017

cpl

cpl

Five largest cities (LHS) Mogas 95 (RHS)

35

40

45

50

55

60

65

70

Oct-16

Nov

-16

Dec

-16

Jan-17

Feb

-17

Mar-17

Apr-17

May

-17

Jun-17

Jul-17

Aug

-17

Sep

-17

100

105

110

115

120

125

130

135

Source: ACCC calculations based on FUELtrac, Platts and Reserve Bank of Australia (RBA) data.

In the year to September 2017:

• monthly average Mogas 95 prices varied by 9.7 cpl, from a low of 49.2 cpl in November 2016 to a high of 58.9 cpl in January 2017

• monthly average retail prices in the five largest cities varied by 13.3 cpl, from a low of 118.4 cpl in July 2017 to a high of 131.7 cpl in January 2017.

Quarterly average Mogas 95 prices were 53.0 cpl in the September quarter 2017, which was 0.6 cpl lower than the previous quarter.

More detail on recent movements in Mogas 95 prices is provided in chapter 5.

3.3 Gross indicative retail differences

Average gross indicative retail differences (GIRDs) in the five largest cities were 10.3 cpl in the September quarter 2017, a decrease of 1.4 cpl from the previous quarter. These are the lowest GIRDs in real terms since the March quarter 2016 (10.1 cpl).

Despite the recent fall in average quarterly GIRDs, they remain 2.4 cpl above their real long term average since the September quarter 2002 of 7.9 cpl.

GIRDs are calculated by subtracting average 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. While not many wholesale transactions occur at TGPs, they can be regarded as indicative wholesale prices. TGPs vary across companies and across cities. TGPs reflect the wholesale price of petrol only, and exclude other retail operating costs (such as branding, transportation, and labour). While GIRDs should not be confused with actual retail profits, they are a broad indicator of gross retail margins.

Table 3.1 shows that, in the five largest cities over the year to September 2017:

• average GIRDs in the September quarter 2017 were highest in Brisbane (12.1 cpl) and lowest in Sydney (7.5 cpl)

• quarterly average GIRDs varied significantly over the past year and across cities, ranging from a high of 15.0 cpl (in Perth in the March quarter 2017) to a low of 7.5 cpl (in Sydney in the September quarter 2017).


Table 3.1: Quarterly average retail petrol prices, TGPs and GIRDs in the five largest cities: December quarter 2016 to September quarter 2017

Location Quarter Retail prices cpl

TGPs cpl

GIRDs cpl

Five largest cities Dec-16 122.0 110.7 11.3

Mar-17 129.1 116.8 12.3

Jun-17 125.2 113.5 11.7

Sep-17 122.5 112.2 10.3

Year to Sep 2017 124.7 113.3 11.4

Sydney Dec-16 119.7 109.7 10.0

Mar-17 124.8 115.6 9.2

Jun-17 122.5 112.3 10.2

Sep-17 118.8 111.3 7.5

Year to Sep 2017 121.5 112.2 9.3

Melbourne Dec-16 123.0 110.7 12.3

Mar-17 130.2 116.8 13.4

Jun-17 127.0 113.5 13.5

Sep-17 123.2 112.2 11.0

Year to Sep 2017 125.8 113.3 12.5

Brisbane Dec-16 125.1 111.1 14.0

Mar-17 130.5 117.3 13.2

Jun-17 127.8 114.0 13.8

Sep-17 124.7 112.6 12.1

Year to Sep 2017 127.0 113.7 13.3

Adelaide Dec-16 120.3 110.8 9.5

Mar-17 127.7 117.0 10.7

Jun-17 122.8 113.7 9.1

Sep-17 122.7 112.3 10.4

Year to Sep 2017 123.4 113.4 10.0

Perth Dec-16 122.0 111.2 10.8

Mar-17 132.1 117.1 15.0

Jun-17 125.7 113.9 11.8

Sep-17 123.3 112.5 10.8

Year to Sep 2017 125.8 113.7 12.1

Source: ACCC calculations based on FUELtrac, BP, Caltex, Mobil, Viva Energy and WA FuelWatch data.

Note: Retail prices, TGPs and GIRDs in Sydney are for E10.


3.4 Retail prices in Brisbane were the highest among the five largest cities

Retail prices in Brisbane are regularly higher than those in Sydney, Melbourne, Adelaide and Perth.

Chart 3.3 shows quarterly average retail prices in Brisbane and average prices across Sydney, Melbourne, Adelaide and Perth over the two years to September 2017. Over this period Brisbane retail prices were on average 3.1 cpl higher than the average across the other four cities (ranging from a high of 5.2 cpl in the June quarter 2016 to a low of 1.3 cpl in the September quarter 2016).

In the September quarter 2017 average retail prices in Brisbane were 124.7 cpl, which was 2.7 cpl higher than the average across the other four largest cities. This was 0.6 cpl lower than the differential in the June quarter.

Chart 3.3: Quarterly average retail prices in Brisbane and the other four largest cities: December quarter 2015 to September quarter 2017

cpl

105

110

115

120

125

130

135

140

Other four largest citiesBrisbane

Dec

-15

Mar-16

Jun-16

Sep

-16

Dec

-16

Mar-17

Jun-17

Sep

-17


The ACCC examined the high retail prices, margins and profits in Brisbane and released a report in October 2017. The findings from this report are provided in appendix B.

3.5 Price cycles in the five largest cities

Retail petrol prices in the five largest cities in Australia move in cycles. These price cycles do not generally occur in Canberra, Hobart or Darwin or in most regional locations. Price cycles are the result of the pricing policies of fuel retailers and the competitive dynamic between them. They only occur at the retail level; wholesale prices do not exhibit similar cyclical movements.

3.5.1 Number of price cycles over the year to September 2017

Table 3.2 shows that over the year to September 2017, the number of price cycles each quarter was relatively stable in all cities. Melbourne had nine price cycles over the year, the lowest number of any city. Perth had the most price cycles, with a regular weekly cycle for the whole period.


Table 3.2: Number of price cycles per quarter in the five largest cities: December quarter 2016 to September quarter 2017

Quarter Sydney Melbourne Brisbane Adelaide Perth

Dec-16 4 2 3 3 13

Mar-17 2 2 2 3 13

Jun-17 3 2 2 3 13

Sep-17 3 3 3 4 13

Year to Sep 2017 12 9 10 13 52


The number of price cycles in the year to September 2017 was lower than the previous year in Sydney (by six price cycles), Adelaide (by four price cycles) and Melbourne (by one price cycle), and remained unchanged in Brisbane and Perth.

3.5.2 Savings from petrol price cycles

By avoiding buying petrol at the peak of the price cycle in the larger capital cities motorists can save money. Chart 3.4 shows daily average E10 prices in Sydney over the six month period 1 April to 30 September 2017. There were six price cycles in that time. Many motorists tend to fill up once a week. If these motorists had avoided buying petrol on the six days around the six peaks during this period, they would have paid on average around 2.6 cpl less.

Chart 3.4: Daily average retail E10 prices in Sydney: 1 April 2017 to 30 September 2017

105

110

115

120

125

130

135

140

145




1 Apr

8 Apr

15 A

pr

22 A

pr

29 A

pr

6 May

13 M

ay

20 M

ay

27 M

ay

3 Ju

n

10 Jun

17 Jun

24 Jun

1 Ju

l

8 Ju

l

15 Jul

22 Jul

29 Jul

5 Aug

12 A

ug

19 A

ug

26 A

ug

2 Sep

9 Sep

16 Sep

23 Sep

30 Sep

cpl


Assuming similar savings from the price cycles for RULP and PULP in Sydney, as from E10 price cycles, the estimated savings overall to motorists in Sydney over a full year would be in the region of $85 million.


Undertaking the same calculations for the other larger cities gives similar results. Charts 3.5 to 3.7 show that in Melbourne average prices would have been 2.3 cpl lower, with estimated savings in the region of $75 million, in Brisbane average prices would have been 2.4 cpl lower, with estimated savings in the region of $40 million, and in Adelaide average prices would have been 3.3 cpl lower, with estimated savings in the region of $30 million. A similar analysis was not undertaken for Perth because it has regular weekly price cycles.

Chart 3.5: Daily average retail petrol prices in Melbourne: 1 April 2017 to 30 September 2017

105

110

115

120

125

130

135

140

145




1 Apr

8 Apr

15 A

pr

22 A

pr

29 A

pr

6 May

13 M

ay

20 M

ay

27 M

ay

3 Ju

n

10 Jun

17 Jun

24 Jun

1 Ju

l

8 Ju

l

15 Jul

22 Jul

29 Jul

5 Aug

12 A

ug

19 A

ug

26 A

ug

2 Sep

9 Sep

16 Sep

23 Sep

30 Sep

cpl


Chart 3.6: Daily average retail petrol prices in Brisbane: 1 April 2017 to 30 September 2017

105

110

115

120

125

130

135

140

145




1 Apr

8 Apr

15 A

pr

22 A

pr

29 A

pr

6 May

13 M

ay

20 M

ay

27 M

ay

3 Ju

n

10 Jun

17 Jun

24 Jun

1 Ju

l

8 Ju

l

15 Jul

22 Jul

29 Jul

5 Aug

12 A

ug

19 A

ug

26 A

ug

2 Sep

9 Sep

16 Sep

23 Sep

30 Sep

cpl



Chart 3.7: Daily average retail petrol prices in Adelaide: 1 April 2017 to 30 September 2017

100

105

110

115

120

125

130

135

140Peaks in red represent the six highest priced days of the cycle



cpl

1 Apr

8 Apr

15 A

pr

22 A

pr

29 A

pr

6 May

13 M

ay

20 M

ay

27 M

ay

3 Ju

n

10 Jun

17 Jun

24 Jun

1 Ju

l

8 Ju

l

15 Jul

22 Jul

29 Jul

5 Aug

12 A

ug

19 A

ug

26 A

ug

2 Sep

9 Sep

16 Sep

23 Sep

30 Sep


Motorists that can fill up less frequently and therefore buy petrol when prices are falling can save even more. For example, if motorists in Sydney avoided buying E10 on the 10 most expensive days around the peak of the price cycle, they would have paid on average 4.3 cpl less. There would be similar savings in the other cities: Melbourne 3.8 cpl, Brisbane 4.1 cpl and Adelaide 6.1 cpl.

Motorists that only buy a small amount of petrol when prices are at their peak, waiting until prices are falling before filling up, can also make significant savings.

Motorists can avoid buying petrol around the peaks by following the ACCC’s advice on its website of when to buy and, importantly, when not to buy. Consumers taking this more active approach would likely save considerably more.

There are often a range of prices across various retailers available to motorists, even at the peak of the price cycle, so they can also use the fuel price apps to decide where to buy.

3.6 Prices in the three smaller capital cities

The differential between retail petrol prices in the three smaller capital cities (Canberra, Hobart and Darwin) and the five largest cities slightly increased in the September quarter 2017 compared with the previous quarter.

Chart 3.8 shows that in the year to September 2017, monthly average retail petrol prices:

• in Darwin, Hobart and Canberra were always higher than in the five largest cities

• in Darwin were marginally higher than those in the five largest cities in October 2016 and significantly higher in most other months

• in Hobart were the highest of the three smaller capital cities since January 2017.


Chart 3.8: Monthly average retail petrol prices in Canberra, Hobart and Darwin and the five largest cities: October 2016 to September 2017

cpl

Five largest citiesHobart Canberra Darwin

105

110

115

120

125

130

135

140

145

150

Oct-16

Nov

-16

Dec

-16

Jan-17

Feb

-17

Mar-17

Apr-17

May

-17

Jun-17

Jul-17

Aug

-17

Sep

-17


In the September quarter 2017 average retail prices in:

• Hobart were 137.2 cpl, or 14.7 cpl higher than in the five largest cities (122.5 cpl)

• Canberra were 128.9 cpl (6.4 cpl higher)

• Darwin were 128.5 cpl (6.0 cpl higher).

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 4.1.

Recent movements in Darwin retail prices are discussed further in section 4.4.

3.7 Retail prices of the different petrol grades

Chart 3.9 shows that retail prices of the different grades of unleaded petrol—RULP, PULP 95, PULP 98, and E10—all moved in a similar manner over the year to September 2017.16

16 E10 prices are for Sydney, Melbourne and Brisbane only. RULP prices in Sydney are used in this section to calculate average RULP prices in the five largest cities.


Chart 3.9: Monthly average retail prices of RULP, PULP 95, PULP 98 and E10 in the five largest cities: October 2016 to September 2017

cpl

100

110

120

130

140

150

160

E10RULP PULP 95 PULP 98

Oct-16

Nov

-16

Dec

-16

Jan-17

Feb

-17

Mar-17

Apr-17

May

-17

Jun-17

Jul-17

Aug

-17

Sep

-17


In the September quarter 2017 the average differential in the five largest cities between:

• RULP and PULP 95 prices was 12.2 cpl (an increase of 0.3 cpl from the previous quarter)

• RULP and PULP 98 prices was 19.5 cpl (an increase of 0.3 cpl)

• E10 and RULP prices was 2.4 cpl (an increase of 0.9 cpl).

Retail prices of the different 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 price of crude oil).

However, the price differentials between the various types of petrol vary over time. For example, retailers will generally set the price of PULP at a fixed premium to RULP. Premiums are adjusted from time to time in response to factors such as changes in international benchmark differentials and local supply and demand conditions.


4 Retail price movements in regional locations

The ACCC monitors fuel prices in all capital cities and over 190 regional locations across Australia. These locations are identified in appendix C.

4.1 Influences on regional petrol prices

Movements 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: a lower level of local competition; lower volumes of fuel sold; distance/location factors; and 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.

4.2 Regional petrol prices in aggregate

Chart 4.1 shows that monthly average prices in the regional locations in aggregate (regional prices) decreased by 1.0 cpl over the September quarter 2017—from 130.7 cpl in June 2017 to 129.7 cpl in September 2017. In contrast, prices in the five largest cities increased by 2.0 cpl over the same period.

Chart 4.1: Monthly average retail petrol prices in regional locations in aggregate and the five largest cities: October 2016 to September 2017

cpl

105

110

115

120

125

130

135

140

Oct-16

Nov

-16

Dec

-16

Jan-17

Feb

-17

Mar-17

Apr-17

May

-17

Jun-17

Jul-17

Aug

-17

Sep

-17

All regional locationsFive largest cities


The average differential between regional prices and prices in the five largest cities in the September quarter 2017 was 6.6 cpl, 0.4 cpl higher than in the June quarter 2017 (6.2 cpl). In 2016–17 the annual average differential was 5.4 cpl.

The monthly average differential between regional prices and prices in the five largest cities varied substantially over the 12 months to September 2017, ranging from a high of 10.2 cpl in July 2017 to a low of 0.8 cpl in December 2016. During the September quarter 2017 the monthly average differential decreased from 10.2 cpl in July 2017 to 3.4 cpl in September 2017.


In September 2017 average prices in 133 regional locations (around 72 per cent of monitored locations) were higher than average prices in the five largest cities.

While 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, during the September quarter 2017 average petrol prices in the five largest cities increased substantially in line with international refined petrol prices, while average petrol prices in regional locations were broadly unchanged.

Further information on petrol price movements in the September quarter 2017 in all locations monitored by the ACCC is presented in appendix C.

4.3 Prices in each of the states and the Northern Territory

Charts 4.2 to 4.8 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 2016 to 30 September 2017.17 The charts also show the differential between prices in regional locations in the state/territory and the respective capital city in the months of June and September 2017, and in 2016–17.

In September 2017 monthly average regional prices were higher than average capital city prices in all states and the Northern Territory, except Tasmania and South Australia.

The charts 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.

Chart 4.2: Seven-day rolling average petrol prices in Sydney and NSW regional locations: 1 October 2016 to 30 September 2017

NSW regional locations Sydney

cpl

Oct-16

Nov

-16

Dec

-16

Jan-17

Feb

-17

Mar-17

Apr-17

May

-17

Jun-17

Jul-17

Aug

-17

Sep

-17

90

100

110

120

130

140

150

Sep avg: 6.1 cplJun avg: 7.6 cpl

2016–17 avg: 8.2 cpl

17 There are no prices available for locations in the Australian Capital Territory other than Canberra. The source for charts 4.2 to 4.8 is ACCC calculations based on FUELtrac data.


Chart 4.3: Seven-day rolling average petrol prices in Melbourne and Victorian regional locations: 1 October 2016 to 30 September 2017

Vic regional locations Melbourne

cpl

Oct-16

Nov

-16

Dec

-16

Jan-17

Feb

-17

Mar-17

Apr-17

May

-17

Jun-17

Jul-17

Aug

-17

Sep

-17

90

100

110

120

130

140

150


2016–17 avg: 0.7 cpl

Chart 4.4: Seven-day rolling average petrol prices in Brisbane and Queensland regional locations: 1 October 2016 to 30 September 2017

Qld regional locations Brisbane

cpl

Oct-16

Nov

-16

Dec

-16

Jan-17

Feb

-17

Mar-17

Apr-17

May

-17

Jun-17

Jul-17

Aug

-17

Sep

-17

90

100

110

120

130

140

150


2016–17 avg: 4.6 cpl


Chart 4.5: Seven-day rolling average petrol prices in Adelaide and South Australian regional locations: 1 October 2016 to 30 September 2017

SA regional locations Adelaide

cpl

Oct-16

Nov

-16

Dec

-16

Jan-17

Feb

-17

Mar-17

Apr-17

May

-17

Jun-17

Jul-17

Aug

-17

Sep

-17

90

100

110

120

130

140

150

Sep avg: –0.5 cplJun avg: 9.3 cpl

2016–17 avg: 2.4 cpl

Chart 4.6: Seven-day rolling average petrol prices in Perth and Western Australian regional locations: 1 October 2016 to 30 September 2017

WA regional locations Perth

cpl

Oct-16

Nov

-16

Dec

-16

Jan-17

Feb

-17

Mar-17

Apr-17

May

-17

Jun-17

Jul-17

Aug

-17

Sep

-17

90

100

110

120

130

140

150


2016–17 avg: 8.1 cpl


Chart 4.7: Seven-day rolling average petrol prices in Hobart and Tasmanian regional locations: 1 October 2016 to 30 September 2017

Tas regional locations Hobart

cpl

Oct-16

Nov

-16

Dec

-16

Jan-17

Feb

-17

Mar-17

Apr-17

May

-17

Jun-17

Jul-17

Aug

-17

Sep

-17

90

100

110

120

130

140

150

Sep avg: –1.1 cplJun avg: –0.6 cpl

2016–17 avg: –1.6 cpl

Chart 4.8: Seven-day rolling average petrol prices in Darwin and Northern Territory regional locations: 1 October 2016 to 30 September 2017

NT regional locations Darwin

cpl

Oct-16

Nov

-16

Dec

-16

Jan-17

Feb

-17

Mar-17

Apr-17

May

-17

Jun-17

Jul-17

Aug

-17

Sep

-17

90

100

110

120

130

140

150


2016–17 avg: 9.0 cpl

4.4 Darwin

The ACCC’s report on the Darwin petrol market was released in November 2015.18 It found that the increase in retail petrol margins in Darwin in recent years had imposed a significant cost on motorists. The report noted that higher prices and profits in Darwin were the result of weak retail competition.

4.4.1 Darwin petrol prices decreased in the September quarter 2017

Chart 4.9 shows quarterly average retail petrol prices in Darwin and the five largest cities from the December quarter 2014 to the September quarter 2017.

18 ACCC, Report on the Darwin petrol market, November 2015, at: https://www.accc.gov.au/publications/petrol-market-studies/report-on-the-darwin-petrol-market.

https://www.accc.gov.au/publications/petrol-market-studies/report-on-the-darwin-petrol-market

https://www.accc.gov.au/publications/petrol-market-studies/report-on-the-darwin-petrol-market


Chart 4.9: Quarterly average retail petrol prices in Darwin and the five largest cities: December quarter 2014 to September quarter 2017

cpl

100

110

120

130

140

150

160

170

180

Five largest citiesDarwin

Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17


In the September quarter 2017 average retail petrol prices in Darwin were 128.5 cpl, a decrease of 1.9 cpl from the June quarter 2017 (130.4 cpl).

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 cpl. Since then it has decreased significantly. The quarterly average differential has ranged from a low of -2.0 cpl in the June quarter 2016 to a high 10.3 cpl in the March quarter 2017.

In the September quarter 2017 it was 6.0 cpl, an increase of 0.8 cpl from the June quarter 2017. In 2016–17 the annual average differential was 5.3 cpl.

4.4.2 Darwin petrol prices are around a long-term competitive cost-based price

The ACCC’s Darwin report noted that motorists were paying around 10 cpl more than they should have been in a competitive market. This was based on a comparison of GIRDs in Darwin compared with those in the larger capital cities.

Chart 4.10 shows Darwin petrol prices on a rolling annual average basis from 1 October 2014. Each daily price in the chart is the average of that day’s price and prices on 364 previous 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 per litre) are higher in Darwin, and assumes that net retail margins in Darwin should be broadly similar to long-term average net 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 of time, this may reflect a less competitive market and mean that questions should be asked about those prices to local retailers.


Chart 4.10: Rolling annual average retail prices and a long-term competitive cost-based price in Darwin, and the difference: 1 October 2014 to 30 September 2017

cpl

cpl

Retail price (LHS) Competitive cost-based price (LHS) Di�erence (RHS)

ACCC announces Darwin market study 10 Mar 2015

Oct-14

Jan-15

Apr-15

Jul-15

Oct-15

Jan-16

Apr-16

Jul-16

Oct-16

Jan-17

Apr-17

Jul-17

100

110

120

130

140

150

160

170

180

–10

0

10

20

30

40

50

60

70

ACCC report released23 Nov 2015

Source: ACCC calculations based on FUELtrac and Informed Sources data, and data from the companies that participated in the Darwin market study.

The chart indicates that petrol prices in Darwin were around a long-term competitive cost-based price in the September quarter 2017.

4.4.3 Darwin GIRDs decreased marginally in the September quarter 2017

Chart 4.11 shows quarterly average GIRDs in Darwin over a three-year period from the December quarter 2014 to the September quarter 2017. GIRDs in Darwin have decreased in recent years since the peak of 30.6 cpl in the September quarter 2014, the highest quarterly average GIRDs in real terms recorded for Darwin since the ACCC began monitoring them in July 2004.

Chart 4.11: Quarterly average petrol GIRDs in Darwin: December quarter 2014 to September quarter 2017

cpl

Five largest citiesDarwin

0

5

10

15

20

25

30

35


Source: ACCC calculations based on FUELtrac, Australian Institute of Petroleum (AIP), BP, Caltex, Mobil, Viva Energy and WA FuelWatch data.

In the September quarter 2017 Darwin GIRDs were 11.7 cpl, a decrease of 0.4 cpl from the June quarter 2017 (12.1 cpl). They were 1.4 cpl higher than those in the five largest cities (10.3 cpl). In 2016–17 annual average GIRDs in Darwin were 12.1 cpl.


4.5 Launceston

The ACCC report on the Launceston petrol market was released in July 2016.19 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 4–5 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.

4.5.1 Launceston petrol prices decreased in the September quarter 2017

In the September quarter 2017 average retail petrol prices in Launceston were 138.2 cpl, a decrease of 2.9 cpl from the June quarter 2017 (141.1 cpl) (see chart 4.12). The average differential between prices in Launceston and the five largest cities was 15.7 cpl, a decrease of 0.2 cpl from the June quarter 2017. In 2016–17 the average differential was 11.9 cpl.

Chart 4.12: Quarterly average retail petrol prices in Launceston and the five largest cities: December quarter 2014 to September quarter 2017

cpl

Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 100

110

120

130

140

150

160

170

Five largest citiesLaunceston


4.5.2 Launceston petrol prices remain above a long-term competitive cost-based price

Chart 4.13 shows Launceston petrol prices on a rolling annual average basis from 1 October 2014 and estimated Launceston prices calculated on a long-term competitive cost basis. These prices have been calculated on the basis outlined in section 4.4.2. The chart indicates that petrol prices in Launceston are currently above a long-term competitive cost-based price, which may reflect the absence of vigorous and effective competition in Launceston.

19 ACCC, Report on the Launceston petrol market, July 2016, at: https://www.accc.gov.au/publications/petrol-market-studies/report-on-the-launceston-petrol-market.

https://www.accc.gov.au/publications/petrol-market-studies/report-on-the-launceston-petrol-market

https://www.accc.gov.au/publications/petrol-market-studies/report-on-the-launceston-petrol-market


Chart 4.13: Rolling annual average retail prices and a long-term competitive cost-based price in Launceston, and the difference: 1 October 2014 to 30 September 2017

cpl

cpl

ACCC report released20 July 2016


Oct-14

Jan-15

Apr-15

Jul-15

Oct-15

Jan-16

Apr-16

Jul-16

Oct-16

Jan-17

Apr-17

Jul-17

110

120

130

140

150

160

170

0

10

20

30

40

50

60ACCC announces Launceston market study10 May 2015

Source: ACCC calculations based on FUELtrac and Informed Sources data, and data from the companies that participated in the Launceston market study.

4.5.3 Launceston GIRDs decreased in the September quarter 2017

Chart 4.14 shows quarterly average GIRDs in Launceston and the five largest cities over the three-year period from the December quarter 2014 to the September quarter 2017. 20

In the September quarter 2017 average GIRDs in Launceston were 20.6 cpl, a decrease of 1.6 cpl from the June quarter 2017 (22.2 cpl). They were 10.3 cpl higher than GIRDs in the five largest cities.

Chart 4.14: Quarterly average petrol GIRDs in Launceston and the five largest cities: December quarter 2014 to September quarter 2017

cpl

Five largest citiesLaunceston

0

5

10

15

20

25


Source: ACCC calculations based on FUELtrac, AIP, BP, Caltex, Mobil, Viva Energy and WA FuelWatch data.

Note: Hobart TGPs were used as a proxy for TGPs in Launceston.

In 2016–17 annual average GIRDs in Launceston were 18.1 cpl, which were the highest GIRDs in real terms since the ACCC began monitoring them in 2004.

20 Hobart TGPs were used as a proxy for TGPs in Launceston.


4.6 Armidale

The ACCC report on the Armidale petrol market was released in November 2016.21 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 cpl higher than RULP prices in the five largest cities between 2012–13 and 2014–15.

4.6.1 Armidale petrol prices decreased in the September quarter 2017

Chart 4.15 shows quarterly average retail petrol prices in Armidale and the five largest cities from the December quarter 2014 to the September quarter 2017.

In the September quarter 2017 average retail petrol prices in Armidale were 124.5 cpl, a decrease of 3.3 cpl from the June quarter 2017 (127.8 cpl). The average differential between prices in Armidale and the five largest cities was 2.0 cpl, a decrease of 0.6 cpl from the June quarter 2017. This was the lowest differential since the June quarter 2016 (-0.3 cpl). In 2016–17 the annual average differential was 7.1 cpl.

Chart 4.15: Quarterly average retail petrol prices in Armidale and the five largest cities: December quarter 2014 to September quarter 2017

cpl

100

110

120

130

140

150

160

170

Five largest citiesArmidale


Source: ACCC calculations based on FUELtrac.

4.6.2 Armidale petrol prices remain above a long-term competitive cost-based price

Chart 4.16 shows Armidale petrol prices on a rolling annual average basis from 1 July 2014 and estimated Armidale prices calculated on a long-term competitive cost basis. These prices have been calculated on the basis outlined in section 4.4.2. The chart indicates that petrol prices in Armidale remain above a long-term competitive cost-based price. This may reflect the absence of vigorous and effective competition in Armidale.

21 ACCC, Report on the Armidale petrol market, November 2016, at: https://www.accc.gov.au/publications/petrol-market-studies/report-on-the-armidale-petrol-market. References to petrol prices in Armidale are to E10 prices.

https://www.accc.gov.au/publications/petrol-market-studies/report-on-the-armidale-petrol-market

https://www.accc.gov.au/publications/petrol-market-studies/report-on-the-armidale-petrol-market


Chart 4.16: Rolling annual average retail prices and a long-term competitive cost-based price in Armidale, and the difference: 1 October 2014 to 30 September 2017

cpl

cpl

ACCC report released21 Nov 2016


Oct-14

Jan-15

Apr-15

Jul-15

Oct-15

Jan-16

Apr-16

Jul-16

Oct-16

Jan-17

Apr-17

Jul-17

110

120

130

140

150

160

170

0

10

20

30

40

50

60ACCC announces Armidale market study3 Aug 2015

Source: ACCC calculations based on FUELtrac and Informed Sources data, and data from the companies that participated in the Armidale market study.

4.6.3 Armidale GIRDs decreased in the September quarter 2017

Chart 4.17 shows quarterly average GIRDs in Armidale over a three-year period from the December quarter 2014 to the September quarter 2017.

In the September quarter 2017 average GIRDs in Armidale were 13.1 cpl, a decrease of 2.3 cpl from the June quarter 2017 (15.4 cpl). These were the lowest quarterly GIRDs since the June quarter 2016 (11.5 cpl). In 2016–17 annual average GIRDs in Armidale were 19.5 cpl.

Chart 4.17: Quarterly average petrol GIRDs in Armidale and the five largest cities: December quarter 2014 to September quarter 2017

cpl

Five largest citiesArmidale


0

5

10

15

20

25

30


Note: Sydney and Brisbane E10 TGPs from monitored companies were used as a proxy for Armidale TGPs.


4.7 Cairns

The ACCC report on the Cairns petrol market was released in May 2017.22 It found that the lack of vigorous and effective retail price competition in Cairns contributed to the increase in retail margins and profits in recent years.

4.7.1 Cairns petrol prices decreased in the September quarter 2017

Chart 4.18 shows quarterly average retail petrol prices in Cairns and the five largest cities from the December quarter 2014 to the September quarter 2017.

In the September quarter 2017 average retail petrol prices in Cairns were 138.1 cpl, a decrease of 1.8 cpl from the June quarter 2017 (139.9 cpl). The average differential between prices in Cairns and the five largest cities was 15.6 cpl, an increase of 0.9 cpl from the June quarter 2017. In 2016–17 the annual average differential was 13.1 cpl.

Chart 4.18: Quarterly average retail petrol prices in Cairns and the five largest cities: December quarter 2014 to September quarter 2017

cpl

100

110

120

130

140

150

160

170

Five largest citiesCairns



In July 2017, United Petroleum entered the Cairns market and for around two weeks afterwards, United Petroleum’s petrol price was around 30 cpl below the market average. In August 2017, United Petroleum opened a second site in Cairns. Both of these sites were pricing around 10 cpl below the market average. There appears to have been a limited response to the cheaper prices at the United Petroleum sites from other fuel retailers.

4.7.2 Cairns petrol prices are above a long-term competitive cost-based price

Chart 4.19 shows Cairns petrol prices on a rolling annual average basis from 1 October 2014 and estimated Cairns prices calculated on a long-term competitive cost basis. These prices have been calculated on the basis outlined in section 4.4.2. The chart indicates that petrol prices in Cairns are currently above a long-term competitive cost-based price.

22 ACCC, Report on the Cairns petrol market, May 2017, at: https://www.accc.gov.au/publications/petrol-market-studies/report-on-the-cairns-petrol-market

https://www.accc.gov.au/publications/petrol-market-studies/report-on-the-cairns-petrol-market

https://www.accc.gov.au/publications/petrol-market-studies/report-on-the-cairns-petrol-market


Chart 4.19: Rolling annual average retail prices and a long-term competitive cost-based price in Cairns, and the difference: 1 October 2014 to 30 September 2017

cpl

cpl

ACCC report released30 May 2017


Oct-14

Jan-15

Apr-15

Jul-15

Oct-15

Jan-16

Apr-16

Jul-16

Oct-16

Jan-17

Apr-17

Jul-17

110

120

130

140

150

160

170

0

10

20

30

40

50

60

ACCC announces Cairns market study 19 April 2016

Source: ACCC calculations based on FUELtrac and Informed Sources data, and data from the companies that participated in the Cairns market study

4.7.3 Cairns GIRDs decreased marginally in the September quarter 2017

Chart 4.20 shows quarterly average GIRDs in Cairns over the three-year period from the December quarter 2014 to the September quarter 2017.

In the September quarter 2017 average GIRDs in Cairns were 22.5 cpl, a decrease of 0.4 cpl from the June quarter 2017 (22.9 cpl). In 2016–17 annual average GIRDs in Cairns were 21.1 cpl.

Chart 4.20: Quarterly average petrol GIRDs in Cairns and the five largest cities: December quarter 2014 to September quarter 2017

cpl

Five largest citiesCairns


0

5

10

15

20

25

30



5 International price movementsThe main influences on movements in retail petrol prices in Australia are the international price of refined petrol (which is influenced in turn by the price of crude oil) and the AUD–USD exchange rate.

5.1 Crude oil and refined petrol

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 on 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—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.

5.1.1 Price movements over the last two years

Chart 5.1 shows international crude oil and refined petrol prices in the two years to September 2017.

Chart 5.1: Weekly average Brent crude oil and Mogas 95 prices: October 2015 to September 2017

Brent crude oil Mogas 95

USD

per bl

20

30

40

50

60

70

80

Oct-15

Jan-16

Apr-16

Jul-16

Oct-16

Jan-17

Apr-17

Jul-17

Source: ACCC calculations based on Platts data.

Weekly average Brent crude oil prices decreased by USD 19 per barrel (or around 40 per cent) from around USD 47 per barrel in October 2015 to a low of USD 28 per barrel in January 2016. This decline was influenced by weaker international economic conditions, and global crude oil production significantly exceeding consumption. From January 2016, prices increased to a high of around USD 56 per barrel in February 2017 before decreasing to around USD 45 per barrel in late-June 2017.

The September quarter 2017 saw a steady increase in weekly average Brent crude oil prices from around USD 46 per barrel in early-July 2017 to around USD 57 a barrel at the end of September 2017. At the end of September 2017, weekly average Brent prices were at their highest level in over two years.


Mogas 95 prices moved in a similar manner to Brent crude oil prices over the two-year period. During the September quarter 2017, prices were around USD 59 per barrel at the beginning of July 2017 and ended the quarter at around USD 70 per barrel.

Quarterly average Brent crude oil and Mogas 95 prices both increased in the September quarter 2017: average Brent crude oil prices increased by around USD 2 per barrel to around USD 52 per barrel, and average Mogas 95 prices increased by USD 3 per barrel to around USD 67 per barrel.

The increase in prices during the quarter was due to OPEC led production cuts, demand from China and geo-political tensions in the Middle East.23

The OPEC cartel met in late-September 2017 and announced that it was deferring a decision to extend the crude oil production cap until at least January 2018.24 The current production cap is scheduled to expire in March 2018.

5.1.2 Crude oil prices in the long term

As with many commodities, crude oil prices fluctuate greatly. In the short run, 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 5.2 shows that over the 40 years to September 2017 WTI crude oil prices in real terms were on average around USD 60 per barrel. Over the last 10 years prices were historically high, with the average around USD 84 per barrel. In the September quarter 2017, real WTI crude oil prices were on average around USD 48 per barrel, broadly the same as the June quarter 2017 and around USD 12 per barrel lower than the 40-year average.

Chart 5.2: Monthly average real WTI crude oil prices: October 1977 to September 2017

USD

per bl

0

20

40

60

80

100

120

140

160

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

WTI 40-year average 10-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, http://www.dlt.ri.gov/Lmi/pdf/cpi.pdf, accessed on 23 October 2017.

Note: Real (inflation adjusted) values in September 2017 dollars.

23 BBC, Brent oil price ease back from two-year highs, 26 September 2017, at: http://www.bbc.com/news/business-41394775, accessed on 23 October 2017.

24 Reuters, Oil rises nearly 1 percent as OPEC defers extension of output cuts, 22 September 2017, at: https://www.reuters.com/article/us-global-oil/oil-rises-nearly-1-percent-as-opec-defers-extension-of-output-cuts-idUSKCN1BX02D, accessed on 23 October 2017.

http://www.dlt.ri.gov/Lmi/pdf/cpi.pdf

http://www.bbc.com/news/business-41394775

http://www.bbc.com/news/business-41394775

https://www.reuters.com/article/us-global-oil/oil-rises-nearly-1-percent-as-opec-defers-extension-of-output-cuts-idUSKCN1BX02D

https://www.reuters.com/article/us-global-oil/oil-rises-nearly-1-percent-as-opec-defers-extension-of-output-cuts-idUSKCN1BX02D


5.2 AUD–USD exchange rate

The AUD–USD exchange rate is a significant determinant of Australia’s retail petrol prices because international refined petrol is bought and sold in United States dollars in global markets.

Chart 5.3 shows that in the two years to September 2017, the AUD–USD exchange rate decreased from around USD 0.70 in October 2015 to a low of around USD 0.69 in January 2016, before increasing to around USD 0.78 in April 2016. It then fluctuated between USD 0.71 and USD 0.78 before peaking to the highest levels in the two-year period, at around USD 0.81 in September 2017, before ending the September quarter at around USD 0.78.

Chart 5.3: Daily AUD–USD exchange rates: 1 October 2015 to 30 September 2017

0.65

0.67

0.69

0.71

0.73

0.75

0.77

0.79

0.81

0.83

Oct-15

Jan-16

Apr-16

Jul-16

Oct-16

Jan-17

Apr-17

Jul-17

USD

Source: RBA data.

Note: Exchange rates are the daily RBA 4.00 pm closing rates. See: http://www.rba.gov.au/statistics/frequency/exchange-rates.html

In the September quarter 2017, the average AUD–USD exchange rate was USD 0.79—around USD 0.04 higher than the June quarter 2017. Had the AUD–USD exchange rate remained at the January 2016 low of USD 0.69, average retail petrol prices in the September quarter 2017 in Australia would have been 8.8 cpl higher (everything else being equal). The higher AUD–USD exchange rate in the September quarter 2017 offset the increase in international refined petrol and crude oil prices.

http://www.rba.gov.au/statistics/frequency/exchange-rates.html

http://www.rba.gov.au/statistics/frequency/exchange-rates.html


6 Diesel and LPG prices

6.1 Diesel price movements

Average retail diesel prices in the five largest cities decreased in the September quarter 2017 to 126.3 cpl, a decrease of 2.2 cpl from the June quarter 2017.

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 tend to broadly follow similar movements over the long term.

Chart 6.1 shows that seven-day rolling average retail diesel prices in the five largest cities broadly tracked Gasoil 10 ppm prices over the past year, although Gasoil 10 ppm prices were more volatile than retail prices over much of this period.

Chart 6.1: Seven-day rolling average retail diesel prices in the five largest cities and Gasoil 10 ppm prices: 1 October 2016 to 30 September 2017

cpl

cpl

Retail prices (LHS) Gasoil-10 ppm (lagged-11 days) (RHS)

20

30

40

50

60

70

80

80

90

100

110

120

130

140

Oct-16

Nov

-16

Dec

-16

Jan-17

Feb

-17

Mar-17

Apr-17

May

-17

Jun-17

Jul-17

Aug

-17

Sep

-17

Source: ACCC calculations based on FUELtrac, Platts and RBA data.

Seven-day rolling average diesel retail prices at the beginning of the quarter were 127.0 cpl. They decreased to a low of 125.1 cpl in early-August 2017 before subsequently increasing by 2.4 cpl to 127.5 cpl at the end of the quarter. Gasoil 10 ppm prices trended upwards in the quarter, from a low of 47.1 cpl in early-July 2017 to a high of 53.8 at the end of September 2017.

Gasoil 10 ppm prices in the September quarter 2017 were around 52 cpl, which was the same as in the June quarter 2017.

6.2 LPG price movements

In the September quarter 2017 average retail LPG prices in the five largest cities were 72.2 cpl, a decrease of 1.3 cpl from the June quarter 2017 (73.5 cpl).

The appropriate international benchmarks for LPG 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 or diesel 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 somewhat 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.

Seven-day rolling average retail LPG prices at the beginning of the quarter were 72.6 cpl. They decreased to a low of 71.6 cpl in late-August 2017 before ending the quarter at 72.3 cpl (see chart 6.2). Over the same period the Saudi CP benchmarks increased by 8.1 cpl, from a low of 25.7 cpl in July 2017 to 33.8 cpl in September 2017

The chart shows that retail prices moved in line with the Saudi CP benchmarks in the first five months of the year to September 2017. Since then retail prices have not been as responsive—both down and up—to movements in benchmarks prices. It is not clear why this is the case.

Chart 6.2: Seven-day rolling average retail LPG prices in the five largest cities and monthly Saudi CP benchmarks: 1 October 2016 to 30 September 2017

cpl

cpl

Retail prices (LHS) Saudi CP (RHS)

20

25

30

35

40

45

50

55

45

50

55

60

65

70

75

80

Oct 16

Nov

16

Dec

16

Jan 17

Feb

17

Mar 17

Apr 17

May

17

Jun 17

Jul 1

7

Aug

17

Sep

17

Source: ACCC calculations based on FUELtrac, RBA, Gas Energy Australia and Reuters data.

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 somewhat 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 have price 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 automotive LPG is sold).


Appendix A—Chairman’s speech to the Asia-Pacific Fuel Industry Forum, Melbourne, 13 September 2017

Fuel price transparency and retail industry competition

Good morning ladies and gentlemen.

When it comes to consumer issues, petrol prices are among the most pressing concerns for consumers and, as a result, for the ACCC and governments.

Pressing and aggravating.

Many consumers appear to be convinced that petrol prices are a rip-off. Indeed, I meet many journalists who are of the same view.

The wild fluctuations in prices that occur in the larger cities as a result of the petrol price cycles only reinforce this view. Consumers can see that international petrol prices have not risen; but fuel prices have.

In regional areas, large variations in the price of petrol between one town and another also leave some consumers understandably frustrated in the belief that they are getting a raw deal on petrol.

These perceptions have been around for many years and remain today.

This is why the current focus of the ACCC is to highlight to consumers the ability of technology to help them find where the cheapest petrol prices are, to encourage them to buy where petrol is cheapest, and to reward retailers which have the lowest prices.

This takes us from a long-standing arrangement whereby only the major retailers had access to comprehensive information about petrol prices, to consumers now being empowered to make purchasing decisions through a range of fuel price apps and websites.

We believe this will, in turn, help drive more competitive markets in petrol retailing.

Today I will take you through some history on the ACCC’s role in petrol and how we arrived at where we are today.

1. The ACCC’s role in petrol

The ACCC has had a role in petrol ever since our establishment in 1995. Some of the key activities in the early years of the ACCC include:

• one of the first reports released by the ACCC was the report of the inquiry into the Petroleum Products Declaration in 1996

• up until August 1998 the ACCC used to regulate wholesale petrol prices

• following the introduction of the GST in July 2000 the ACCC was responsible for monitoring the Fuel Sales Grant Scheme

• in 2001 the ACCC prepared a report looking into the options for limiting petrol price cycles

• in 2004 the ACCC assessed the supermarket ventures into petrol and their shopper docket schemes, and

• in the early-2000s the ACCC took several price fixing cases in regional Victoria to court, with some wins and some losses.

As petrol prices increased over the 2000s, so did community concerns.

In February 2003 the average regular unleaded petrol price in the five largest cities (that is, Sydney, Melbourne, Brisbane Adelaide and Perth), which the ACCC has historically used as one of the benchmarks to monitor petrol price movements, reached $1 per litre.


In April 2008 it reached 150 cents per litre (cpl).

In July 2008 prices peaked at around 167 cpl.

Concern that movements in retail petrol prices in Australia may not be reflecting movements in international refined petrol prices led to the ACCC’s petrol inquiry in 2007.

Following the release of the report of that inquiry, in December 2007, the Australian Government issued a direction under Part VIIA of the Competition and Consumer Act 2010 for the ACCC to monitor the prices, costs and profits relating to the supply of unleaded petroleum products in the petroleum industry in Australia.

Over the following seven years the ACCC released comprehensive annual monitoring reports which were widely respected though not widely read by consumers.

In December 2014 there was a change in the focus in the Ministerial Direction—from our longer, annual reports to shorter, more consumer-focused quarterly reports.

We also started our detailed market studies into competition in regional petrol markets, as many regional locations have by far the least competitive petrol markets in Australia.

These studies were backed by compulsory information gathering powers under the Competition and Consumer Act.

To date, we have released four of these reports—covering Darwin, Launceston, Armidale and Cairns—and we are now reviewing the lessons learned and how we might apply those lessons to our monitoring of regional locations.

But our monitoring work is only one part of our involvement in the petrol industry.

Looking back over the last 10 years, activity in the petrol industry has involved a number of areas of ACCC responsibility.

For example, in terms of our enforcement role:

• In 2013 we investigated the competitive effect of ‘excessive’ shopper docket discounts.

– This led to an undertaking with the major supermarkets that prevented discounts in excess of 4 cpl, and also prevented their supermarket businesses cross-subsidising their fuel businesses to cover the cost of these discounts.

– We were concerned that offers by the major supermarkets of fuel discounts of 8 cpl or more could have longer-term effects on the structure of retail fuel markets. When the discounts were 8 cpl or more we also saw an increase in the underlying price of petrol; some people received high discounts, but around 80% of the population paid more for petrol.

– We were particularly concerned about the impact of excessive shopper docket discounts on the viability of some independent retailers who play an important role in driving prices down in retail petrol markets.

• We also investigated price information sharing by the major retailers, through the Informed Sources Oil Price Watch service, which resulted in an undertaking to share this information with consumers. I will return to this issue later.

We also keep a close eye on merger activity in the sector as there have been several significant transactions over the last 10 years:

• in 2010 7-Eleven acquired much of Mobil’s retail network following our decision to oppose a bid by Caltex

• in 2013 Peregrine acquired BP’s retail network in South Australia

• this year, Caltex acquired MileMaker’s retail sites in Victoria, and

• we currently have before us the proposed BP acquisition of Woolworths’ retail sites (which I will also address later on).


2. Historically site-specific fuel price data was only available to the major retailers

The 2007 petrol inquiry enhanced our understanding of the Informed Sources fuel price monitoring service, and its influence on retail price setting.

Through the Informed Sources service, major petrol retailers had the ability to exchange fuel price data across all their sites on a near real-time basis. But this information was only available on a near real-time basis to the subscribers to the Informed Sources service—the major petrol retailers.

We were concerned that this contributed to an imbalance in pricing transparency between petrol retailers and Australian consumers, and circumstances where retailers could use this pricing information to make decisions about their own prices but consumers could not identify the cheaper sites or compare prices.

We were also concerned about the frequency of the information exchange between the petrol retailers.

Each subscriber to the Informed Sources service is required to provide the price of fuel at each of their service stations, usually updated electronically every 15 minutes, and receives the prices provided by other subscribers in return.

The Informed Sources service seems to be unique to Australia.

If it did operate this way in other jurisdictions, it could well be illegal under competition law, particularly where there are prohibitions against ‘concerted practices’.

A concerted practice is a form of coordination where competitors substitute cooperation with each other for the uncertainties of competition.

In August 2014, following a complex investigation, the ACCC took court action against Informed Sources and several petrol retailers that subscribed to the service (BP, Caltex, Coles Express, Woolworths and 7-Eleven).

We alleged that by facilitating the exchange of price information, the Informed Sources service enabled petrol retailers to communicate with each other about their prices. By doing so, the Informed Sources service had the effect or likely effect of substantially lessening competition.

While it had national application, we focussed on the market for the sale of petrol in Melbourne.

Our case was that the fuel price information service allowed subscribers not only to receive their competitors’ prices, but also to know that their own prices were being communicated to those competitors on a regular basis.

This enabled retailers to propose what some called a ‘restoration price’, where they significantly increased the price at some of their sites and could quickly see if their competitors would follow it by increasing their own prices.

We considered that the fuel price information service allowed this behaviour to occur with greater certainty and reduced commercial risk.

The ACCC believed that the service increased the cost and reduced the benefit of petrol retailers engaging in competitive rivalry. We were particularly concerned that it likely led to consumers paying higher prices for petrol.

In December 2015, the ACCC resolved these proceedings with undertakings from Informed Sources and the petrol retailers (BP, Caltex, Woolworths, and 7-Eleven).

Coles Express agreed to withdraw from the Informed Sources service altogether.

The undertakings from petrol retailers provide for greater transparency of fuel price information and reduce the potential for any adverse effect on competition.

The undertakings from Informed Sources ensure that it will make the same fuel price information available to consumers as it does to its subscribers.


This information has been available to consumers since May 2016, including through a mobile phone app. It assists consumers to make better decisions about when and where to buy petrol, including by identifying the best time to buy and the sites with the lowest prices.

The information also encourages price discounters by bringing their lower prices to the attention of consumers.

3. Some international evidence shows petrol price transparency helps retailers more than consumers

In recent years we have seen a move towards fuel price transparency in other jurisdictions around the world. Two examples that have been the subject of recent discussion are government schemes in Chile and Germany.

The Chilean scheme commenced in February 2012 when the government legislated that retail sites post their prices on a government website and keep prices updated as they changed.

The website was introduced in March 2012, first covering the capital, Santiago, and the whole country by July 2012.

The German scheme, the German Market Transparency Unit for Fuel, commenced in 2013, hosted by the German competition authority (the Bundeskartellamt).

It requires German petrol stations to report price changes for petrol in real time to the Market Transparency Unit. The Unit does not itself operate a consumer information service. Consumer information services must have approval to receive the price data.

A recent paper to the OECD Competition Committee discussed the impact of these two schemes.

The paper warned that when there is an increase in transparency in concentrated markets with homogeneous goods, the risk of tacit collusion may also increase.

However, I believe that the starting point is really important here.

In Germany for example, retailers were not able to see each other’s prices in any comprehensive way. They relied on driving around noting down the prices of their competitors.

This is a very different starting point from what we saw in Australia, where for many years the major retailers were able to see each other’s prices on a near real-time basis, but consumers could not.

The paper to the OECD notes that in Germany, there has been an increase in prices since the introduction of their fuel price transparency scheme in 2013.

However, the key reason for the increase was because the information was also available to the retailers, who could use it to respond more effectively to their competitors’ prices.

In Chile, the paper found that margins increased following the introduction of the fuel price transparency scheme.

However, areas of the country where the fuel price website was used least by consumers were the same areas where retail margins increased the most. In areas where consumers took greater advantage of the fuel website margins increased only slightly or fell.

We believe that in Australia, where large retailers had been able to see each other’s fuel prices for many years, giving that information to consumers empowers them to search for lower prices, rewards lower priced retailers and drives competition in the market.

Ultimately, we believe that consumers are better off and markets perform better if consumers are well informed.


4. Fuel price data is becoming widely available to consumers

Since we reached the undertaking with Informed Sources and the major retailers in December 2015, fuel price apps and websites have become a fast-growing segment of the fuel market.

In recent years we have seen the introduction of apps and websites such as MotorMouth and GasBuddy, as well as those released by the fuel retailers, like Woolworths and 7-Eleven.

Some apps—such as GasBuddy and Petrol Spy—are crowdsourced. Others—such as MotorMouth—primarily rely on data from major retailers.

And then, in some states, there are government systems.

For example, the WA FuelWatch scheme—with the 24 hour rule—has been around for 16 years.

NSW introduced a state-wide scheme in August 2016 called FuelCheck that covers all sites in the state.

The Northern Territory has announced that it will introduce a similar scheme to NSW later this year, while Tasmania has helped facilitate a partnership between the RACT and GasBuddy.

So there is a lot happening in this area at the moment, and in our recent public reports and communications we are really emphasising the benefits of these websites and apps.

These benefits not only accrue to those consumers who use a website or an app to search for cheaper petrol, but also to retailers who discount.

Based on experience, we believe this will help drive competition in the petrol market, leading to more competitive prices across the board.

We think this information is especially important today when there appears to be increasing confusion about fuel prices due to the changing nature of the price cycle over recent years.

Gone are the days of so called ‘cheap Tuesdays’, when there were regular weekly price cycles in most of the larger capital cities and consumers could at least know when the cheapest day to fill up was.

These days, only Perth has a regular cycle, and there we should talk about ‘cheap Mondays’.

Consumers understandably find it very confusing to know when to fill up in the other four major cities.

The ACCC website, and some others, provide information about when to buy in these cities, and have done so for some time, but until recently a missing piece of the puzzle for consumers has been knowing where to buy.

Fuel price transparency apps and websites allow consumers to work out where to buy when you might see very large differences in prices between sites.

During the decreasing phase of the cycle, prices can vary across sites in a major city by up to 10–15 cpl.

When prices start to increase, the variation can be as high as 25–30 cpl.

Motorists can use the ACCC or other websites that give price cycle advice to work out when to buy, and can use the various websites or apps to work out where to buy.

By doing this, motorists filling up a vehicle with a 60 litre tank could save themselves in the region of $10–15 per tank of petrol.

The ACCC has not endorsed one type of system of fuel price transparency, or made a judgement on whether it should be privately run or government run.

But while we believe that having many website and app providers can be a good thing, the timeliness and completeness of the price data is very important.


It is important that not only the major players are covered by these websites and apps, but also that smaller independents are also included, as they often provide competitive tension that is so important in these markets. This was an issue we found in our regional market studies, which I will talk about in a moment.

In our quarterly reports we have reported on the increased take-up of fuel price apps and websites in recent years. And while we would like to see more consumers using them, the early results have been encouraging.

5. Regional market studies

As I mentioned before, the ACCC has now released four regional market studies, covering the Darwin, Launceston, Armidale and Cairns markets.

While there were some differences that made each location unique, there were several common themes across all these studies.

One was that the profits that were being made in these locations were high, far higher in most cases than the Australian average.

For example, retail prices were so high in Darwin that in 2013–14 the average site in Darwin was making around $1.2 million in profit. Between 2009–10 and 2013–14 net profit per site in Darwin more than doubled.

And in Cairns we found that retailers were making very high profits of around half a million dollars on average in 2015–16, which was around 38 per cent higher than the Australian average.

Market structure was also important: who were the major players in the market, and were there enough retailers pricing competitively?

More importantly, were those retailers a large enough presence in the market to make a positive impact on competition? In all four locations the answer to that was ‘no’.

The importance of price transparency in improving competition in these markets was also a common theme.

We found that while fuel prices for many sites are available to consumers via apps and websites in these locations, many lower-priced smaller independents are not always covered by the current apps and websites.

We believe this to be the case in many regional locations across Australia.

In Cairns, for example, we found that while the majority of the market, including all the major retailers, were usually around the same price, there were two small independents that were consistently around 10 cpl cheaper than the market.

While the major apps and websites would show the prices of the major players in the Cairns market, these two small independents were usually missing from the apps or had prices listed that were out of date.

6. High margins

You may have noticed in our recent quarterly reports that we’ve been reporting on margins being the highest they’ve ever been in real terms.

We do understand and have reported that the petroleum industry has been facing increased compliance costs in recent years, especially in NSW.

Examples of these include the NSW vapour recovery legislation and the ethanol mandate there, and now in Queensland. We have expressed our view regarding the ethanol mandates many times in our reports.

These costs as well as others are a legitimate reason why margins have increased in recent years.

The ACCC fully acknowledges that businesses need to make a profit.

However, based on data that was sent to us by many of the major companies last year, it is our belief that the increase in margins in recent years is well in excess of these costs.


Based on our calculations, each extra cent per litre on the price of petrol costs consumers across Australia a total of around $180 million a year.

In this time of higher margins, the ACCC will be doing more and more to push transparency, so it is clear to consumers which companies are charging more and which companies are discounting.

7. BP’s acquisition of Woolworths retail fuel network

Finally, an update on our merger review of BP’s proposed acquisition of the Woolworths retail fuel network.

This is a very large and very complex task.

There are two aspects of the analysis that make it difficult:

• the complexity of the data, and using that data to try to understand price competition in various markets

• analysing price competition at the local market level, especially when it involves hundreds of sites and overlapping local markets.

In August 2017 we released a statement of issues where we noted our concern that the transaction may substantially lessen competition by removing a strong competitor in Woolworths, which has a different pricing strategy to BP, and which has historically had lower prices.

We are progressing with our analysis, and propose to have a final decision by 26 October.

Conclusion

Ladies and gentlemen, Australian consumers have long been sensitive to movements in petrol prices. Especially when price movements can be large and inexplicable.

Informed consumers through the mechanisms I have outlined today are an essential step in developing the more competitive market they want and they deserve.

Thank you for your time.


Appendix B—Key points from the Brisbane petrol market study

Retail petrol prices in Brisbane have been higher than in the other four largest cities for many years

Between 2009–10 and 2016–17, Brisbane motorists paid on average 3.3 cpl more for petrol than motorists in the other four largest cities in Australia. The annual difference varied over this period, ranging from a high of 4.4 cpl (in 2014–15) to a low of 2.5 cpl (in 2010–11 and 2016–17). Brisbane petrol prices were also higher in comparison with each of the other four largest cities.

Retail margins and profits are also higher in Brisbane

Gross indicative retail differences (GIRDs) are the difference between retail prices and published terminal gate prices (TGPs). They are a broad indicator of gross retail margins. However, they should not be confused with actual retail profits as they also include retail costs, which vary through time.

Between 2009–10 and 2016–17, annual average GIRDs in Brisbane were 3.2 cpl higher than annual average GIRDs in the other four largest cities. Brisbane GIRDs were also higher in comparison with each of the other four largest cities.

As a result of higher retail margins, average net profits per site in Brisbane were significantly higher than the average net profit per site across Australia. In 2015–16, average net profit per site in Brisbane was around 55 per cent higher than the average net profit per site across Australia.

Retail pricing is less competitive in Brisbane

An indication of the degree of price competition in the retail petrol market is the extent to which prices are above TGPs at the troughs and peaks of the price cycle.25

Over the first four months of 2017, the difference between retail prices and TGPs at the bottom of the price cycle was significantly higher in Brisbane than in Sydney. Sydney was chosen as a comparator as it is the closest of the other four largest cities geographically to Brisbane. At the three troughs in Brisbane during this period, retail prices were on average 3.3 cpl higher than TGPs. At the three troughs in Sydney, retail prices were on average 0.3 cpl lower than TGPs.

Similarly, the difference between retail prices and TGPs at the top of the price cycle was significantly higher in Brisbane than in Sydney. At the two peaks in Brisbane during the four-month period, retail prices were on average 24.1 cpl higher than TGPs. At the three peaks in Sydney, retail prices were on average 21.5 cpl higher than TGPs.

Brisbane has fewer independent chains than other cities

Over its years monitoring the petroleum industry the ACCC has found that independent chains can be vigorous and competitive price setters in large metropolitan markets, and their absence can mean that prices are otherwise higher.

A feature of the Brisbane market is that it has fewer independent chains than Sydney. For the purposes of this analysis, the ACCC has considered an independent operator that runs 10 or more retail sites with the same brand, and sets the retail price at those sites, to be an independent chain.

In Brisbane there are four independent chains: 7-Eleven, Puma Energy, Freedom Fuels and United. As at 30 June 2017, they had 138 retail sites in total, accounting for 34 per cent of the total number of Brisbane retail sites.

25 A petrol price cycle is a movement in retail price from a low point (or trough) to a high point (or peak) to a subsequent low point. In these cycles, prices steadily increase for a period followed by a sharp increase.


In Sydney, there are seven independent chains: 7-Eleven, United, Speedway, Metro, Budget, Westside and Jasbe (a BP-branded but independently-operated chain). As at 30 June 2017, they had 330 retail sites in total, accounting for 39 per cent of the total number of Sydney retail sites.

The independent chains in Brisbane do not price as aggressively as in other cities

The ACCC examined retail petrol prices by major retailer in Brisbane and Sydney over the first four months of 2017.

In Brisbane, an average retail petrol (i.e. RULP) price for this period was calculated for the following major retailers: BP COCO, Caltex COCO, Coles Express, Woolworths, 7-Eleven, United, Freedom Fuels, Puma Energy and a small independents category (which comprises independently-owned BP and Caltex retail sites and small independent retail sites).26

The chart below shows the difference between each major retailer’s average RULP price and the market average RULP price in Brisbane in the four-month period.

Difference between each major retailer’s average RULP price and the market average RULP price in Brisbane: 1 January to 30 April 2017

–6 –4 –2 0 2 4 6

7-Eleven

Woolworths

Puma Energy

United

Small independents

Caltex COCO

Freedom Fuels

BP COCO

Coles Express

cpl

Source: ACCC calculations based on data from Informed Sources.

Note: Informed Sources collects price data electronically from its subscribers and manually for other brands.

The chart shows that average retail prices of 7-Eleven, Woolworths, Puma Energy and United were below the average market price in Brisbane, and average retail prices of Coles Express, BP COCO and Freedom Fuels were above the market average price. Caltex COCO and small independents were both around the market average price.

In Sydney, an average retail E10 price was calculated for this four-month period for the following retailers: BP COCO, Caltex COCO, Coles Express, Woolworths, 7-Eleven, United, Jasbe, Speedway, Budget, Metro, Westside, and a small independents category (which comprises independently-owned BP and Caltex branded retail sites and small independent retail sites).

E10 prices are used in Sydney rather than RULP because there are more sales of E10 than RULP in Sydney.

The following chart shows the difference between each major retailer’s average E10 price and the market average E10 price in Sydney in the period 1 January to 30 April 2017.

26 COCO refers to those BP and Caltex sites which are company owned and company operated, and at which BP and Caltex respectively set the retail price.


Difference between each major retailer’s average E10 price and the market average E10 price in Sydney: 1 January to 30 April 2017

–6 –4 –2 0 2 4 6

Coles Express

BP COCO

Caltex COCO

Woolworths

7-Eleven

United

Small independents

Westside

Budget

Metro

Speedway

cpl

Jasbe

Source: ACCC calculations based on data from Informed Sources.

Note: Informed Sources collects price data electronically from its subscribers and manually for other brands. Data is also obtained from FuelCheck.

The chart shows that average retail prices of seven retailers (Speedway, Metro, Budget, Westside, United, 7-Eleven and Woolworths) and the small independents category were below the average market price in Sydney. The average retail prices of Coles Express, BP COCO, Caltex COCO and Jasbe were above the market average price.

A comparison of the average prices by major retailer in Brisbane with those in Sydney shows that the extent of aggressive retail pricing by independent chains was significantly greater in Sydney than in Brisbane. It also shows that the average price for the small independents category was around the average market price in Brisbane, but below it in Sydney.

In Brisbane, the four lowest priced retailers (7-Eleven, Woolworths, Puma Energy and United) were on average only around 1.3 cpl below the market average price, while in Sydney the four lowest priced retailers (Speedway, Metro, Budget and Westside) were on average around 3.8 cpl below the market average price.

The proportion of retail sites below the market average price was lower in Brisbane (around 45 per cent) than in Sydney (around 65 per cent).

There are a number of possible reasons for pricing being less competitive in Brisbane

Retail petrol markets are not the same across cities in Australia and some are more competitive than others. Historically, the Sydney and Melbourne retail petrol markets have tended to be more competitive than the other capitals. It can be difficult to identify reasons for the different degree of competition in each market.

There are a number of possible reasons why independent chains in Brisbane do not price as aggressively as in other cities, such as Sydney and Melbourne.

Until July 2009, the Queensland Government provided a petrol subsidy at the retail level of around 9.2 cpl (when GST is included). In the nine-year period 2000–01 to 2008–09 annual average petrol prices in Brisbane were only 7.8 cpl below the annual average in the other four largest cities.


When the Queensland Treasurer announced the abolition of the subsidy scheme, he noted that: “The recent independent Pincus inquiry identified that Queenslanders are not receiving the full benefit of what taxpayers are spending on the scheme.”27 This may reflect that competition was not effective in fully passing on the subsidy to consumers. This lack of competitiveness appears to have persisted in the Brisbane market beyond the cessation of the subsidy in mid-2009.

Changes in market structure may also be a reason why independent chains price less aggressively in Brisbane than in other cities. The number of independent chains in Brisbane has declined over the last 10 years. In 2007, Matilda (an independent chain that operated around 26 retail sites in Brisbane) was acquired by another existing independent chain, Neumann Petroleum. In 2013, Neumann Petroleum was purchased by Puma Energy.

In contrast, in Sydney, the market share (by site number) of the four lowest priced independent chains (Speedway, Metro, Budget and Westside) increased from around 6 per cent in 2007 to around 18 per cent in 2017.

High prices and profits in Brisbane have imposed a significant cost on Brisbane motorists

The estimated cost to Brisbane motorists of having to pay 3.2 cpl more for RULP than the other four largest cities is around $30 million per year. As the retail margin on other types of petrol (such as E10 and premium unleaded petrol) in Brisbane is also higher than the other four largest cities by broadly the same amount, the total cost to motorists in Brisbane is around $50 million per year.

As retail prices in Brisbane have been consistently higher than those in the other four largest cities since July 2009, this suggests that the cost over the eight years since then would be in the region of $400 million.

Steps to promote competition

The ACCC has noted in its regional market studies that increased petrol price transparency and promotion of effective price competition can lead to lower prices.28 The regional petrol market studies have also noted the importance of monitoring and public reporting of high retail prices.

Increased transparency and promotion of vigorous and effective price competition can lead to lower prices

Readily available information about current retail petrol prices enables motorists to shop around and purchase petrol at relatively lower priced retail sites. Not only do motorists benefit from those lower prices, but the availability of petrol price data may promote competitive market behaviour. It will reward those retailers that are prepared to actively compete on price, because their pricing behaviour can be seen, and acted upon, by motorists.

During 2016 a number of websites and apps were introduced in Australia which provide consumers with near real-time retail petrol pricing information. 7-Eleven introduced an app in February 2016 which provides information about retail prices at all 7-Eleven sites, and GasBuddy commenced operations in Australia in March 2016. The NSW FuelCheck website and NRMA app commenced in August 2016. The existing MotorMouth app and website were modified in May 2016 to provide near real-time prices.

In 2017 the Northern Territory Government announced that it would introduce a similar scheme to NSW later this year, and the Tasmanian Government has helped facilitate a partnership between the Royal Automobile Club of Tasmania and GasBuddy.

27 The Hon. Anna Bligh, Premier and Minister for the Arts, and the Hon. Andrew Fraser, Treasurer and Minister for Employment and Economic Development, Fuel Subsidy abolished to boost budget bottom line, Joint media statement, 2 June 2009, at: http://statements.qld.gov.au/Statement/Id/64178, accessed on 1 September 2017.

28 See also the speech by the Chairman of the ACCC, Mr Rod Sims, to the Asia Pacific Fuel Industry Forum in Melbourne on 13 September 2017, entitled ‘Fuel price transparency and retail industry competition’, available at: https://www.accc.gov.au/speech/fuel-price-transparency-and-retail-industry-competition.

http://statements.qld.gov.au/Statement/Id/64178

https://www.accc.gov.au/speech/fuel-price-transparency-and-retail-industry-competition

https://www.accc.gov.au/speech/fuel-price-transparency-and-retail-industry-competition


These new and modified fuel pricing websites and apps joined other existing ones, such as the Woolworths fuel app, and the long-established Western Australian FuelWatch website.

Motorists in Brisbane can use the fuel price apps and websites relevant to Queensland to decide when to buy petrol and from which site. In the larger cities, at any point in time, there is often a wide range of retail prices.

For example, on 31 August 2017 in Brisbane the range between the highest and lowest retail petrol price at retail sites was over 30 cpl. The wide variation in retail prices is shown in the following screenshots from the GasBuddy and MotorMouth apps.

Screenshot of Brisbane petrol prices on the GasBuddy app as at 11.16 am on 31 August 2017

Source: GasBuddy app.


Screenshot of Brisbane petrol prices on the MotorMouth app as at 11.21 am on 31 August 2017

Source: MotorMouth app.

By timing their purchases of petrol, and choosing to buy from the lowest priced retailer, motorists filling up a vehicle with a 60 litre tank could save themselves in the region of $10–15 per tank of petrol.

Motorists in Brisbane may wish to note those retailers that generally have retail prices that are below the market average and use this as a guide when shopping around.

Monitoring and public reporting of high retail prices

The ACCC’s regional market studies have noted the importance of monitoring and public reporting of high retail prices. Transparency and close scrutiny of retailer pricing behaviour is likely to reduce the incentive of petrol retailers to increase and/or maintain high prices.

Public monitoring and publication of retail prices can shine a light on what is happening in the market. This could include monthly comparisons of average retail petrol prices in Brisbane with those in the capital cities and nearby locations, as well as with historical prices.

Queensland Government agencies, motoring organisations, media establishments and academics can use the publicly available retail price data to analyse and comment on retail petrol prices. This could include commentary and analysis about retail petrol prices by location and by brand/retailer over time.

Monitoring and reporting on TGPs and GIRDs over time would also be useful. It would allow Brisbane motorists to see if retailers are passing on decreases in wholesale prices when they occur. The ACCC currently reports on this information in petrol monitoring reports, but more continuous and local reporting may be more effective.


Appendix C—Petrol price data for monitored locationsThe ACCC monitors fuel prices in all capital cities and over 190 regional locations across Australia.

Monthly average retail petrol prices for June and September 2017, and the change between the two, are shown in table C1 below.29 The table also shows the differential between average petrol prices in the five largest cities and each regional location in the month of September 2017 and 2016–17.30

Table C1: Monthly average petrol prices in June and September 2017 and the city–country differential in the month of September 2017 and 2016–17—cpl

Location June 2017 monthly avg

Sep 2017 monthly avg

Change Jun to Sep

Differential Sep–17

Differential 2016–17

Sydney 122.2 122.6 0.4

Melbourne 127.1 125.8 –1.3

Brisbane 130.3 127.6 –2.7

Adelaide 117.6 127.8 10.2

Perth 124.5 127.6 3.1

Five largest cities 124.3 126.3 2.0

Hobart 138.6 137.1 –1.5 10.8 11.4

Canberra 129.5 129.9 0.4 3.6 6.8

Darwin 130.1 128.1 –2.0 1.8 5.3

New South Wales

Albury 127.5 126.1 –1.4 –0.2 1.5

Armidale 129.9 127.2 –2.7 0.9 9.0

Ballina 133.9 129.5 –4.4 3.2 8.5

Batemans Bay 135.9 135.9 0.0 9.6 10.4

Bathurst 126.3 128.4 2.1 2.1 5.4

Bega 136.3 132.4 –3.9 6.1 10.2

Broken Hill 127.3 126.3 –1.0 0.0 3.0

Bulahdelah 130.2 122.8 –7.4 –3.5 7.7

Casino 118.0 117.0 –1.0 –9.3 –1.0

Central Coast 122.4 123.2 0.8 –3.1 3.0

Coffs Harbour 129.7 127.9 –1.8 1.6 3.8

Cooma 134.0 133.3 –0.7 7.0 8.1

Coonabarabran 140.4 138.1 –2.3 11.8 11.2

Cootamundra 127.9 126.0 –1.9 –0.3 3.1

Cowra 128.1 126.3 –1.8 0.0 –1.1

Deniliquin 135.2 130.7 –4.5 4.4 7.7

Dubbo 133.1 129.5 –3.6 3.2 7.9

Forbes 136.0 134.9 –1.1 8.6 7.7

Forster 131.4 131.8 0.4 5.5 10.6

29 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. Nine locations—Blackall, Buronga, Charleville, Cloncurry, Gundagai, Normanton, Oberon, Orbost and Weipa—did not have sufficient data for June and/or September 2017. E10 prices instead of RULP prices are reported in Sydney, Bulahdelah, Coonabarabran, Cowra, Gilgandra, Gunnedah, Lithgow, Murwillumbah, Ulladulla, Wellington and West Wyalong.

30 The source for all prices in this appendix is ACCC calculations based on FUELtrac data.




Change Jun to Sep



Gilgandra 132.8 128.4 –4.4 2.1 7.2

Glen Innes 133.8 129.4 –4.4 3.1 n/a

Goulburn 117.4 119.9 2.5 –6.4 –2.1

Grafton 128.4 117.6 –10.8 –8.7 3.7

Griffith 130.8 130.5 –0.3 4.2 6.4

Gunnedah 129.5 129.2 –0.3 2.9 5.2

Hay 129.9 129.2 –0.7 2.9 3.2

Inverell 132.7 129.9 –2.8 3.6 6.8

Jerilderie 133.9 130.6 –3.3 4.3 6.6

Kempsey 128.8 127.4 –1.4 1.1 4.9

Leeton 126.1 125.9 –0.2 –0.4 0.3

Lismore 126.1 122.8 –3.3 –3.5 3.4

Lithgow 118.1 117.9 –0.2 –8.4 0.8

Merimbula 127.2 130.1 2.9 3.8 5.7

Mittagong 131.3 129.5 –1.8 3.2 11.4

Moama 119.9 122.6 2.7 –3.7 –1.8

Moree 128.9 129.4 0.5 3.1 6.2

Moruya 132.8 133.6 0.8 7.3 6.0

Moss Vale 127.8 129.5 1.7 3.2 7.2

Mudgee 130.6 130.1 –0.5 3.8 7.8

Murwillumbah 127.4 120.2 –7.2 –6.1 0.4

Muswellbrook 128.2 130.0 1.8 3.7 6.6

Narrabri 135.4 134.3 –1.1 8.0 8.3

Newcastle 118.7 124.0 5.3 –2.3 1.1

Nowra 124.8 123.3 –1.5 –3.0 4.2

Nyngan 132.6 130.3 –2.3 4.0 7.5

Orange 127.6 129.2 1.6 2.9 4.2

Parkes 132.8 131.7 –1.1 5.4 8.9

Port Macquarie 130.9 131.4 0.5 5.1 7.8

Queanbeyan 125.2 127.4 2.2 1.1 4.2

Singleton 135.7 134.1 –1.6 7.8 8.3

Tamworth 131.0 130.2 –0.8 3.9 6.2

Taree 129.5 130.8 1.3 4.5 9.1

Temora 128.2 125.0 –3.2 –1.3 2.0

Tumut 133.5 130.1 –3.4 3.8 5.9

Tweed Heads South 129.9 124.7 –5.2 –1.6 2.8

Ulladulla 122.6 122.0 –0.6 –4.3 3.8

Wagga Wagga 133.0 128.7 –4.3 2.4 7.6

Wauchope 131.9 131.2 –0.7 4.9 7.1

Wellington 127.9 126.3 –1.6 0.0 –2.6

West Wyalong 130.1 129.2 –0.9 2.9 4.9

Wollongong 126.9 126.0 –0.9 –0.3 0.4

Woolgoolga 133.3 127.7 –5.6 1.4 3.5

Yass 128.8 129.2 0.4 2.9 8.0




Change Jun to Sep



Northern Territory

Alice Springs 141.4 141.2 –0.2 14.9 13.2

Katherine 140.4 135.1 –5.3 8.8 8.9

Tennant Creek 149.6 146.8 –2.8 20.5 21.0

Queensland

Atherton 139.9 137.9 –2.0 11.6 11.7

Ayr 128.1 127.0 –1.1 0.7 0.7

Biloela 135.8 132.8 –3.0 6.5 11.0

Blackwater 143.9 137.9 –6.0 11.6 13.3

Bowen 131.9 129.9 –2.0 3.6 8.2

Bundaberg 124.7 126.2 1.5 –0.1 0.2

Caboolture 129.5 130.4 0.9 4.1 3.1

Cairns 139.8 137.9 –1.9 11.6 13.1

Charters Towers 129.9 129.9 0.0 3.6 9.2

Childers 127.1 125.5 –1.6 –0.8 1.9

Cunnamulla 131.2 131.9 0.7 5.6 7.2

Dalby 126.5 121.9 –4.6 –4.4 4.6

Emerald 142.9 137.9 –5.0 11.6 12.0

Gladstone 126.2 125.2 –1.0 –1.1 4.6

Gold Coast 128.8 129.3 0.5 3.0 1.7

Goondiwindi 134.9 134.8 –0.1 8.5 5.2

Gympie 123.5 124.3 0.8 –2.0 1.4

Hervey Bay 130.8 128.1 –2.7 1.8 9.5

Ingham 134.2 132.7 –1.5 6.4 7.1

Innisfail 139.7 130.3 –9.4 4.0 12.2

Ipswich 126.9 127.1 0.2 0.8 –2.3

Kingaroy 135.1 131.9 –3.2 5.6 6.4

Longreach 145.3 145.3 0.0 19.0 13.6

Mackay 129.1 128.8 –0.3 2.5 7.2

Mareeba 130.1 129.8 –0.3 3.5 9.4

Maryborough 126.5 124.5 –2.0 –1.8 1.4

Miles 121.7 123.3 1.6 –3.0 –4.3

Moranbah 130.0 131.1 1.1 4.8 4.2

Mt Isa 141.6 137.9 –3.7 11.6 9.4

Rockhampton 137.8 133.1 –4.7 6.8 11.8

Roma 125.1 124.9 –0.2 –1.4 5.1

Sunshine Coast 131.3 128.6 –2.7 2.3 5.2

Toowoomba 123.1 125.7 2.6 –0.6 0.7

Townsville 126.3 124.6 –1.7 –1.7 5.3

Tully 139.5 129.9 –9.6 3.6 10.3

Warwick 129.7 127.9 –1.8 1.6 7.8

Whitsunday 123.1 119.9 –3.2 –6.4 –2.0

Yeppoon 137.0 131.6 –5.4 5.3 11.5




Change Jun to Sep



South Australia

Bordertown 126.5 125.6 –0.9 –0.7 0.1

Ceduna 128.8 129.1 0.3 2.8 3.3

Clare 119.5 124.2 4.7 –2.1 –4.6

Coober Pedy 148.3 147.7 –0.6 21.4 n/a

Gawler 120.4 130.9 10.5 4.6 –0.2

Kadina 119.7 127.0 7.3 0.7 –3.0

Keith 126.5 127.4 0.9 1.1 1.3

Loxton 125.0 124.9 –0.1 –1.4 –1.6

Mt Gambier 123.8 122.2 –1.6 –4.1 –1.6

Murray Bridge 128.2 125.0 –3.2 –1.3 –0.9

Naracoorte 129.4 129.2 –0.2 2.9 2.6

Port Augusta 127.0 127.3 0.3 1.0 0.6

Port Lincoln 129.0 125.4 –3.6 –0.9 1.5

Port Pirie 122.6 125.2 2.6 –1.1 –2.3

Renmark 127.9 125.1 –2.8 –1.2 –2.0

Tailem Bend 127.0 127.7 0.7 1.4 0.4

Victor Harbour 129.5 124.8 –4.7 –1.5 1.6

Whyalla 129.4 126.7 –2.7 0.4 1.9

Tasmania

Burnie 137.3 135.1 –2.2 8.8 8.3

Campbell Town 138.9 135.9 –3.0 9.6 10.7

Devonport 137.4 133.7 –3.7 7.4 9.3

Huonville 137.2 133.4 –3.8 7.1 9.6

Launceston 140.0 137.9 –2.1 11.6 11.9

New Norfolk 139.5 137.7 –1.8 11.4 9.9

Queenstown 139.7 138.9 –0.8 12.6 12.9

Smithton 134.3 134.2 –0.1 7.9 8.7

Sorell 140.2 138.6 –1.6 12.3 9.2

Ulverstone 136.0 134.9 –1.1 8.6 8.6

Wynyard 137.1 136.1 –1.0 9.8 9.0

Victoria

Ararat 126.3 126.8 0.5 0.5 0.7

Bairnsdale 120.0 120.0 0.0 –6.3 –3.0

Ballarat 123.7 122.9 –0.8 –3.4 –1.0

Benalla 129.6 127.9 –1.7 1.6 2.7

Bendigo 123.8 122.7 –1.1 –3.6 1.5

Cobram 126.5 128.3 1.8 2.0 2.0

Colac 126.7 125.9 –0.8 –0.4 –0.1

Corryong 135.6 137.4 1.8 11.1 9.1

Echuca 120.9 122.9 2.0 –3.4 –1.1

Euroa 129.4 129.7 0.3 3.4 2.5

Geelong 130.0 125.3 –4.7 –1.0 0.2

Hamilton 129.0 127.1 –1.9 0.8 2.0

Horsham 129.9 130.3 0.4 4.0 2.4




Change Jun to Sep



Koo Wee Rup 125.3 126.7 1.4 0.4 0.1

Kyabram 129.8 127.3 –2.5 1.0 2.0

Lakes Entrance 127.8 129.3 1.5 3.0 1.1

Leongatha 128.7 128.8 0.1 2.5 3.6

Mansfield 131.8 132.3 0.5 6.0 6.5

Mildura 129.2 127.8 –1.4 1.5 2.3

Moe 129.9 128.3 –1.6 2.0 1.6

Morwell 129.2 128.3 –0.9 2.0 0.5

Portland 129.0 131.5 2.5 5.2 0.9

Sale 129.6 128.3 –1.3 2.0 2.0

Seymour 127.7 126.1 –1.6 –0.2 1.8

Shepparton 125.1 125.2 0.1 –1.1 0.6

Swan Hill 128.7 127.3 –1.4 1.0 2.4

Traralgon 129.3 128.8 –0.5 2.5 1.8

Wallan 127.6 126.0 –1.6 –0.3 0.9

Wangaratta 126.0 126.7 0.7 0.4 0.5

Warrnambool 128.9 129.4 0.5 3.1 0.9

Wonthaggi 128.5 129.7 1.2 3.4 3.4

Wodonga 126.2 123.0 –3.2 –3.3 0.4

Yarrawonga 129.8 131.9 2.1 5.6 1.7

Western Australia

Albany 126.9 127.5 0.6 1.2 2.0

Boulder 135.8 135.3 –0.5 9.0 9.1

Bridgetown 127.6 127.2 –0.4 0.9 4.4

Broome 145.5 144.2 –1.3 17.9 21.1

Bunbury 129.7 129.7 0.0 3.4 4.5

Busselton 129.5 129.4 –0.1 3.1 2.0

Carnarvon 142.1 142.1 0.0 15.8 17.4

Collie 130.6 128.5 –2.1 2.2 4.3

Dongara 127.6 127.5 –0.1 1.2 5.9

Esperance 131.3 130.1 –1.2 3.8 7.7

Eucla 148.7 148.9 0.2 22.6 25.5

Geraldton 128.9 129.0 0.1 2.7 4.7

Kalgoorlie 135.9 135.4 –0.5 9.1 8.7

Karratha 144.9 139.9 –5.0 13.6 21.6

Manjimup 126.3 125.6 –0.7 –0.7 1.2

Mount Barker 125.4 126.6 1.2 0.3 3.1

Port Hedland 139.1 136.8 –2.3 10.5 15.3

Waroona 119.4 128.9 9.5 2.6 n/a

report on the australian petroleum market—september ... on the australian petrol… · 1.3 united...

Documents