ACCC: Petrol prices hit lowest since 2002, but margins hit highest
Australian motorists are loving cheap fuel almost as much as the petrol stations.
According to the ACCC, petrol prices have dropped 3.9 cents per litre (cpl) since the March quarter, resulting in prices that are at their lowest since 2002. However, the ACCC sees more room for improvement and points out that gross retail margins (the difference between retail and wholesale prices, and generally how much fuel brands earn on petrol sales) have tended to grow at the same time despite a slight drop of 0.6cpl since last quarter.
Margins remain especially high in Melbourne and Perth, reaching their highest in real terms since 2002.
"While motorists are enjoying the cheapest petrol since 2002, we believe prices should have been even lower given the continuing high gross retail margins," said ACCC chairman Rod Sims.
"Prices at the pump in 2016-17 are reflecting the relatively low international price of refined petrol which fortunately is a result of the OPEC cartel failing to successfully restrict the supply of crude oil."
Motorists will find this to be a pleasant change compared to the start of the year, when OPEC restrictions led to the highest quarterly average fuel prices since 2015. But gross retail margins have gone the other way and actually increased by an average of 0.4cpl since then.
In regional areas especially, fuel prices might be much higher than they need to be. In most of the regional areas being tracked in detail, the ACCC has found exceptionally high gross retail margins.
"Motorists in Launceston, Armidale, and Cairns are paying too much for petrol," said the ACCC chairman. "We encourage people to use fuel price apps to locate petrol stations in their area with relatively lower prices."
Cairns in particular is a major outlier, with petrol stations showing remarkable net profits, around 38% higher than other parts of Australia. The silver lining is that this can also mean much bigger savings when shopping around.
"In Cairns, motorists that shop around can find petrol that is consistently around 10cpl lower than the average," Sims said. "Competition is driven by the willingness of motorists to shop around for the best price."
Many of the factors behind the cost of petrol, like wholesale oil prices, are beyond the control of motorists. These are the factors currently driving prices down to their lowest since 2002.
But gross retail margins are another major factor, and right now they seem to be driving prices the other way. Fortunately, this factor is largely in the hands of Australian motorists. If enough people shop around for cheaper fuel, entire cities could see petrol prices decrease further.