A tip off on stopping the Big Petrol rip off
Here we go again. Another festive season and yet another petrol rip off!
A ridiculously unaffordable scenario
Now for some of us there’s nothing new in that - we have simply got used to being ripped off. For the free market theorists and other apologists for the big oil companies and major petrol retailers, like Coles and Woolworths, they like the fact that petrol margins have been growing even if it has been at the expense of motorists.
It’s easy for the free market theorists to turn a blind eye to motorists being gouged as some of the free market theorists may be shareholders of the big petrol retailers or may even earn big dollars advising them. They may even have a company or taxpayer funded petrol card. There’s nothing like a vested interest to cloud a person’s economic frame of mind.
For the comrades who think that petrol prices should be higher they should spare a thought for those struggling Aussie workers who need to buy lots of petrol to drive to work because there’s a lack of public transport. The comrades may be pleased to hear suggestions of a public transport levy on the sale of petrol that’s actually used to fund new public transport initiatives.
Here the free market theorists and comrades may not be that different after all as they may even agree on the use of taxation as a way of changing people’s behaviour. Remember the carbon tax?
But what about the poor motorists? Who speaks for them?
Well, to their credit the motoring bodies around Australia have spoken up about the rip off during this festive season. These bodies are not always so vocal in exposing the rip off. After all they have to deal with the Federal Government on national road and safety issues and Federal Governments don’t take too kindly to vocal critics.
But on this occasion the motoring bodies added their voices of concern about the festive season rip off, or more particularly the games the oil companies and major retailers were playing with the so-called price cycle. That’s where the petrol retailers jack up the price of petrol by up to 15 cents a litre in one go without any economic justification.
What pressed the motoring bodies into action on this occasion? Quite simply, because the games and the resulting rip off were a little more blatant this time and no doubt the poor struggling motorists were complaining and asking what their motoring bodies were doing.
Where do these concerns end up? Well, the ACCC Petrol Commissioner of course! He’s the petrol cop on the beat that Swan promised us and you have to wonder how many motorists know his name. He’s also the guy that usually tells us that everything is generally fine with petrol pricing across Australia.
Well, you would be forgiven for saying that if everything is generally fine with petrol prices, then why do we need an ACCC Petrol Commissioner that costs taxpayers a small fortune? Maybe abolishing the ACCC Petrol Commissioner would free up some much needed funds to improve public transport…
Surely, the free market theorists would agree with abolishing the ACCC Petrol Commissioner. Don’t free market theorists believe in fewer regulators? Why aren’t the free market theorists calling for the abolition of the ACCC Petrol Commissioner?
Maybe the free market theorists also think that everything is fine with petrol pricing? Even then why would we need an ACCC Petrol Commissioner? We would still have an ACCC to enforce our competition laws if the Petrol Commissioner was abolished.
Anyway, games are being played with motorists and it’s time to do something about it. To do so requires the Federal Government and the ACCC having the power and the will to deal with all the different games being played at different times.
Before anyone gets too excited and says that nothing can be done about petrol prices because of “peak oil” or because prices are set internationally we need to remember a few things.
The notion of peak oil, or more specially that oil is basically non-renewable with decreasing supplies, is generally factored into the international price of a barrel of oil and hence the international price is typically much higher than the actual cost of producing oil.
So while notions of peak oil may be an element in the international price of oil, they do not fully explain the day-to-day fluctuations in the international price of oil. The fact is that the international price does fluctuate on a daily basis to reflect actual changes in the day-to-day demand or expected demand for oil.
Obviously, when demand falls, the international price also falls. That’s what happened in October 2011, when the international price we use in Australia – the Singapore benchmark price – fell significantly with fears of an economic slowdown.
Those falls in the Singapore benchmark price translated into falls of around 9 cents a litre in the average wholesale price across Australia. From 17 October 2011 the average wholesale prices starting dropping sharply which should have meant sharp falls in average retail prices.
The problem is that the average retail prices have not come down as much as they should have, especially in regional areas where average retail prices have basically remained unchanged in many places. After a 10-week period of much lower wholesale prices it’s clear that retail prices have had more than enough time to come down to fully reflect the sharp falls in the wholesale price.
You would expect the ACCC Petrol Commissioner to be out there telling us that we should be expecting lower retail prices. But no, we instead get the yearly ACCC petrol prices report that tells us that everything is generally fine with petrol prices. No wonder motorists and their motoring bodies were really annoyed during this festive season.
What’s the point of having a yearly ACCC petrol report if chances are that it ends up being used in the oil company’s promotional material to say how wonderful they are? Surely, there’s something fundamentally wrong with the way we are handling the petrol rip off.
Then of course there’s the old, but much loved oil company and supermarket game of geographic price discrimination where a retailer charges a different price for the same petrol at different locations. Obviously, motorists in higher priced locations are being ripped off.
Here the answer is very simple. The Federal Government should require all petrol retailers to publish their retail prices online and in real time so that motorists can see where to get the everyday lowest petrol prices. The big players all have a website so it should be very easy for them to do.
Where a small petrol retailer can’t afford to have a website then the Government can make funding available from the money it saves from abolishing the ACCC Petrol Commissioner and stopping the publication of the ACCC’s yearly petrol reports that are more like lonely economics textbooks on a library shelf than a blueprint outlining the tangible steps that could be taken to inject real competition into the Australian petrol industry.
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