Sack the petrol commissioner - we’re paying too much
Are you fed up with costly political gimmicks by the Federal Government? Well, you should be as those gimmicks are costing you, the taxpayer, lots of money. We all know about the money wasted on Fuelwatch and GroceryChoice. While those debacles are long gone, they are not forgotten and serve as a constant reminder of how taxpayers’ money can be easily wasted.
That’s why we need to be vigilant to ensure that the Government doesn’t waste any more of your taxpayer money. Now there is one ongoing waste of money and that relates to the so-called Office of the Petrol Commissioner. Here we have a Petrol Commissioner at the ACCC that “watches” petrol prices.
You probably wouldn’t know, and perhaps don’t even care that we have actually had two different ACCC Petrol Commissioners appointed. The first left quickly, and the second one, Joe Dimasi, had been a long time ACCC staffer who was up-sized to a Commissioner title, with all the added costs to the taxpayer that a Commissioner title brings with it.
Clearly, appointing an ACCC Petrol Commissioner comes at a cost to taxpayers. So while the individuals holding the title of ACCC Petrol Commissioner are competent people, their appointment comes at a cost to you, the taxpayer. Is that cost justified? The short answer is no.
The problem was that the Office of the Petrol Commissioner was not given any new, specific powers to tackle the cosy club that dominates the Australian petrol industry. In short, the Petrol Commissioner was just another ACCC Commissioner who was given the title of Petrol Commissioner so the Federal Government could show that it was doing something about petrol prices.
Now, of course, there will be those who think that nothing can be done about petrol prices. Such a defeatist view can easily be dismissed. Yes, oil prices are set internationally, but they can be manipulated. Indeed, the spikes in international prices earlier in the year can be traced back to increased activity by speculators in the market at the time.
Then, of course, there is the Singapore benchmark price for unleaded used to calculate local petrol prices. That benchmark, surprise, surprise, consistently represents some of the highest international prices for unleaded petrol. An inflated international benchmark price gives you an inflated starting point for local prices.
So why don’t we have a basket of international prices for our benchmark for unleaded petrol? A basket is less prone to manipulation and better reflects trading activity across the international market for petrol. The adoption of a more appropriate benchmark of international prices on which to base Australian prices is certainly something that could be done.
It’s not only an inflated Singapore benchmark price we need to worry about. Indeed, on May 6 the Singapore benchmark price for unleaded fell dramatically and that would ordinarily mean lower prices in Australia.
As the Singapore benchmark price represents the starting point for calculating local prices any fall in that benchmark price should lead to lower wholesale prices in the first instance and then lower retail prices.
Well, Australian wholesale prices did start to fall and have fallen on average about 8 cents a litre. That fall in wholesale prices should have been passed through at the retail level, especially after four weeks.
Have retail prices fallen to fully reflect the falls in the Singapore benchmark price and Australian wholesale prices for unleaded? You guessed it, Australian retail prices have not fallen as much as they should have.
Yes, there have been falls in the larger capital cities, but the falls have not been as large as they should have been. In regional areas the picture is bleak as retail prices have remained unchanged or have only fallen by a nominal amount. In some regional centres retail prices have even defied gravity and have gone up.
That’s a rip off in anyone’s language and the rip off continues. Now, one would expect that the Petrol Commissioner would be out there telling the oil companies and major retailers like Coles and Woolworths to do the right thing and reduce retail prices. While the silence from the Petrol Commissioner has been deafening, it’s interesting to note that in the past the Commissioner has been vocal in telling us when prices were expected to go up.
It would not be too hard to tell us that retail prices should be coming down. Ultimately, it’s probably not surprising that little, if anything, is said by the Petrol Commissioner about prices needing to come down for the simple reason that the oil companies and the major retailers like Coles and Woolworths are likely to just thumb their nose at the Commissioner. Just remember that the Federal Government didn’t give him any new specific powers to bring the oil companies and Coles and Woolworths into line where they play games.
The harsh reality is that with both the Singapore benchmark price and Australian wholesale price having come down recently, retail prices should have also been coming down significantly. The fact that they haven’t is no surprise as the oil companies and major retailers act as cosy club.
With the demise of the independents over the years, the Australian petrol market has become increasingly concentrated and that’s led to retail prices being higher than they would have been if there was more independent competition in the market.
Diversity in competition, with a range of small, medium and large businesses, is essential to providing strong, ongoing price and product competition in the market. In contrast, markets dominated by players of a like mind and size will generally lead to like-minded pricing behaviour. That’s why Coles and Woolworths generally follow or copy one another.
Is the existence of a Petrol Commissioner changing behaviour in the petrol industry? Would anything change in the petrol industry if the Office of the Petrol Commissioner was abolished? The simple answer to both questions is no.
In the absence of a Petrol Commissioner the existing weak competition laws would continue to be administered by the remaining ACCC Commissioners. Would anyone miss the Petrol Commissioner? You be the judge.
So given that we need to cut the Federal Budget deficit it would seem fairly obvious that we can save some of your money by abolishing the Office of the ACCC Petrol Commissioner.
Read all about it
Up to the minute Twitter chatter
The latest and greatest
Good morning Punchers. After four years of excellent fun and great conversation, this is the final post…
I have had some close calls, one that involved what looked to me like an AK47 pointed my way, followed…
In a world in which there are still people who subscribe to the vile notion that certain victims of sexual…