It’s been a rollercoaster year so far with a number of businesses closing and prices reducing all over the place due to global oil costs dropping. Now our prime minister is left with the difficult decision of getting the large corporations to explain why are taking advantage of the current market conditions to benefit their own pockets.
Malcolm Turnbull should be summoning the CEO’s of Coles and Woolworths to question them on why their companies haven’t passed on the full cut of lower prices for fuel to customers. According to consumer watchdog, fuel stations across the country are realising record margins despite fuel prices being the lowest they have been in 14 years.
The latest report on the Australian petroleum industry, conducted by the Australian Competition and Consumer Commission (ACCC) found that average fuel prices in 2015-16 were at their lowest levels since 2002. These prices will save customers money, but not as much as we should be receiving. Gross retail margins on the sale of fuel reached their highest levels ever, highlighting that retailers are not passing on the full amount of money saving opportunities to consumers.
Across the five largest Australian cities, the average price per litre of petrol was 121.7¢, with gross retail margins being roughly 11.2¢. This margin figure is the highest the ACCC has seen since it began monitoring fuel prices in 2002. Rod Sims, chairman of the ACCC said the watchdog was concerned about the petroleum industry’s high gross retail margins which suggest consumers are not reaping the full benefit of lower international crude oil and refined petrol prices.
There is nothing that we can do individually to encourage retailers to drop their prices across the country, but in our numbers we have the power to convince them to become more competitive by shopping around for the best prices.
Mr Sims made big advancements when he increased transparency across the industry with real-time petrol price monitoring apps earlier this year in May. This helped apply pressure on retailers to become more competitive as people could search websites and apps such as MotorMouth for the best prices in their area.
Services such as this have already helped customers across Australia save hundreds of dollars when filling up at the bowser because they can clearly see which stations in their area have the cheapest prices. The power to save more money lies within our hands because in our numbers we can drive competition in the fuel industry.
The most staggering news to discover was that profit margins were not equally spread across the industry either. It was supermarkets, Coles and Woolworths who consistently had the most expensive fuel prices with the highest profit margins too, whilst independents’ margins were much lower. It is usually the independents that drop their prices first when the market adjusts and they are the last to raise their prices again, it’s the big-bully retailers who are taking advantage of the market.
Of course Mark McKenzie, chief executive of the Australasian Convenience and Petroleum Marketers Association (ACAPMA) said the ACCC’s report didn’t tell the full story and that it focused too much on gross retail margin rather than gross retail profit. Apparently their reduced profits from convenience store sales and increasing cost of state and territory legislation were responsible for showing inflated gross sales margins. However, I’m not so sure we can believe everything they say whilst margins are still at their highest in 14 years and fuel at its lowest.
To give you an idea of what the average price per litre of fuel is in Australia, here is a list of cities below, but also don’t forget to save money with one of the price comparison websites or apps out there too.