Paying too much for petrol? Thank Rod Sims

From News:

MOTORISTS are being hit with the highest January prices for petrol since 2004 – and economists warn that the pain at the bowser will get even worse.
In the first week of January, Australian Institute of Petroleum figures show that motorists in Victoria and Western Australia were enjoying the cheapest average petrol cost per litre – $1.55 – while drivers in the Northern Territory were being slugged with a whopping $1.74 per litre.
Tasmania was the next most expensive place to fill up the tank, with an average of $1.62 per litre, followed by Queensland on $1.60 per litre and New South Wales and South Australia, both on a $1.58 average price per litre.
Prices were higher than the state average in Sydney, Melbourne, Adelaide and particularly in Brisbane, where motorists were paying 1.7 cents per litre above the state average.

Adding to your bowser pain is the ACCC:

Outlining his priorities for this year, the ACCC boss said he would continue to pursue large penalties against big companies for breaching consumer laws, was preparing for a series of ­significant merger decisions, and was closely monitoring petrol prices.

PETROL DISCOUNT LIMIT
Mr Sims said the deal with Coles and Woolworths to limit shopper docket petrol prices to a maximum of 4¢ per litre should start to have an impact this month.

“It comes into effect on 31st December and people can still run off the discounts they already have. But I would see early in the new year you will start to see the effect,” Mr Sims said.

In addition, the major investigation into the two big supermarket chains and their suppliers, which could result in enforcement action, would be completed by March.

It reflects very poorly on Joe Hockey that he didn’t pick up the phone to advise Mr Sims that the government had no confidence in his interpretation of the law and then appoint a new head of the ACCC who would maintain the competitive rivalry between Coles and Woolworths.

This entry was posted in Economics and economy. Bookmark the permalink.

42 Responses to Paying too much for petrol? Thank Rod Sims

  1. Bruce

    Thank Glenn Stevens you mean. He’s the one jawboning the dollar down by 15% in a couple months.

  2. Tel

    Prices for petrol in Sydney are around $1.70 per litre, prices for the shit that comes out of a bowser but contains no octane at all and certainly is not petrol are slightly lower.

  3. Percy

    Sims is confusing the hell out of me. He starts of well re privatisation of state owned energy assets then flips into protectionist mode for fuel stations. One of those C’s stands for Consumer yes?

  4. caveman

    “Mr Sims said the deal with Coles and Woolworths to limit shopper docket petrol prices to a maximum of 4¢ per litre should start to have an impact this month.”

    lol. Won’t bring prices down at the bowser or supermarket.

  5. Johno

    Here’s a surprise.

    Do you reckon our fearless employees at the ABC would follow up on a story like this and point out the failings of our regulators. You do you think they would run the same old same old of the big bad oil companies.

    No come on. Think about it. You’ve read all of that nice Mr Scott’s propaganda about honest unbiased objective reporting. Surely it must be true. Would he lie to you?

  6. Mike of Marion

    State Governments won’t say boo – extra GST revenue

  7. The ACCC is also interfering in the egg market, trying to impose its own definition of the term “free range”. If it succeeds, free range egg prices will double. The only people to benefit will be the “alternative lifestyle” mob that gives their chooks names. Consumers certainly won’t.

  8. Louis Hissink

    Stop complaining you lot – this is a command economy under another name. I wonder if the ACCC had a precursor in the former NAZI or Italian FASCIST governments. For that matter what department did the USSR have acronymic ally.

    David L, free eggs will double in price? Nyuk, nyuk, nyuk.

    Apologies – can’t help when given such wonderful straight lines.

  9. JohnA

    …and economists warn that the pain at the bowser will get even worse.

    And those economists are wrong – AGAIN!

    See this chart from the AIP? It shows that prices are coming back down in a week or two, and our dollar isn’t to blame, although it hasn’t helped.

    This other chart from the same site reflects that prices have fluctuated between 140 and 170 over the year, climbing in November and December due to international factors (cold Northern winter – didn’t we comment on a thread to that effect yesterday?).

    Mr Sims and Mr Stevens are not that good at jawboning our petrol prices.

  10. Michel Lasouris

    Has anybody noticed the increase in the “poor man’s petrol”? LPG has risen here in just a few months from 70c -ish to often !110c per litre; and increase of 50% roughly over 3 months. Bloody disgrace!
    It could all be fixed if the Government got off it’s arse and invested in Coal to Liquid technology. The basic economics are I understand that 1 tonne of coal ($27?) will produce between 1 and 2 barrels of basic fuel oil. So the barrel price equivalent lies about A$20 as opposed to SLC at U$93 and Asian oil at US$115; and rising.
    The plant to produce about 100,00 barrels per day would cost A$10 Bn (NBN is costing A$50-60 bn?)
    Do the arithmetic…. we could be paying a fraction for diesel and jet fuel.
    I’m off to investigate DIY diesel again!

  11. Michel Lasouris

    I meant to add that the above seems a chance for Abbott/Hunt to do something MEANINGFUL about their much lauded “Positive Action” on Carbon reduction. Yes I do know it’s not necessary, but this would be a win /win. It meets the LNP promises AND shuts the Greens up for EVAH!

  12. JohnA

    caveman #1141536, posted on January 8, 2014 at 9:06 pm

    “Mr Sims said the deal with Coles and Woolworths to limit shopper docket petrol prices to a maximum of 4¢ per litre should start to have an impact this month.”

    lol. Won’t bring prices down at the bowser or supermarket.

    I explained this on another thread a few days ago. The supermarkets win because they get better throughput at the register. The bowser price is not controlled by the supermarkets (see my earlier reply above).

    What proportion of the dockets issued will expire without being used? And how many people find that they can get better deals by shopping around their various service stations (and supermarkets) anyway?

    I usually buy E10 at a United servo and get 4c off the R91 price without a docket. Today I was very low and filled up with 60L. I happened to miss out on a 3c difference between two of the United servos I frequent, but out of a $90 bill it would have amounted to $1.80: meh!

    I predict that the limitation on the dockets will mainly hit premium fuels, which will no longer get to within cooee of the regular stuff. So I predict a lot fewer average punters will try R100, VPower or those other exotically named (and 15-20c dearer) fuels. Whether that squashes the price difference (in order to “move product”), or reduces actual sales, remains to be seen.

  13. 2dogs

    In general, the ACCC needs to be less concerned with collusion, and more concerned with lowering barriers to entry – particularly regulatory barriers.

    A few more refineries would significantly improve Australian petrol prices, but given how hard and costly it is start them up in Australia, we aren’t likely to see any new ones soon. We’d be hard pressed to keep the ones we have.

  14. Rabz

    Look – I’ve said it before and will say it again – why are these preposterous, marxist numpties so obsessed with discount fuel vouchers?

    And why are these equally preposterous gliberal idiots (that we elected) indulging them?

    Enough, FFS.

    :x

  15. Louis Hissink

    The way, the only way, for the market to set prices of fuel is for government to get out of the process. Period.

    But if government actually owns the petroleum companies, whether directly or indirectly, then we have a different ball game.

    Actually the issue is who actually controls petroleum production, and hence its redistribution.

    Government.

  16. Rabz

    Actually the issue is who actually controls petroleum production, and hence its redistribution.

    Government.

    What – as opposed to them imposing extortionate taxes as though it’s their ‘divine right’?

  17. Rabz

    And that’s “extortionate taxes” on fuel, Lou, in case you thought I was being unduly obtuse.

  18. Spitfire

    Did I miss something, or are fuel prices even higher now than what they were back in 2008 when crude oil prices were higher and the dollar lower?

    Somebody is making a killing here and we the suckers are getting screwed as usual.

  19. Major Elvis Newton

    Filling the Cadillac last Saturday at the local metropolitan Caltex, 98Octane was $1.77 per litre.

    This is not a new news story.

  20. Rabz

    I sympathise, Elvis, good sir.

    I too, have to use 98 octane and as a result get to pay the extra special ‘extortionate’ prices.

  21. Oh come on

    You can’t make this shit up. December 31st was a Tuesday (the second cheapest day of the price cycle), the average petrol price was around 140c/l in my city. On the next day, Wednesday, that should have fallen to 138c/l. You could set your watch by this. But on Wednesday, January the 1st, the price shot up to 156c/l!

    Initially, I assumed it had something to do with the public holiday. Then I thought maybe the fuel excise had gone up at the start of 2014. But no, it’s just a uniform price rise – and 156c is what you pay on the cheapest day of the week. The next day it was 166c or something (Thursday’s the most expensive day to buy fuel) and again started falling gradually until today (Wednesday). Tomorrow it’ll spike again; set your watch by it.

    What the hell is the explanation for this increase? The fact that all stations march in lock-step with the weekly cycle stinks of price collusion, and the fact that they all put their prices up around 20c a litre on January 1 does too. Where is the ACCC? Oh, they’re done with petrol now they’ve helped Coles and Woolworths end the consumer-friendly shopper docket discount price war.

    Abolish the ACCC. Tits on a bull would be amusing if nothing else. The ACCC has no redeeming features.

  22. Oh come on

    Spitfire: I love the way petrol prices spike as soon as there’s a sharp, rapid fall in the dollar or increase in crude oil prices. But when there’s a sharp rapid rise in the dollar or decrease in crude oil prices, it’s always “oh these discounts take several weeks to filter through to the price at the pump”. Fuck off and stop taking us for mugs.

  23. Mark

    When our fuel prices are based on unrelated foreign spot prices then we all deserve to be taken for mugs. Mal Fraser, your government’s fault! Fuel Parity Pricing was just a means of upping the tax take. In case anyone doesn’t know, LPG prices are locked into the Saudi ARAMCO prices. Australia does not import LPG!

  24. Paul

    When our fuel prices are based on unrelated foreign spot prices then we all deserve to be taken for mugs. Mal Fraser, your government’s fault! Fuel Parity Pricing was just a means of upping the tax take. In case anyone doesn’t know, LPG prices are locked into the Saudi ARAMCO prices. Australia does not import LPG!

    I still remember Bill Hayden indignantly telling us that Labor would remove this iniquitous impost once elected to power. I also recall how the strong dollar necessitated that prices go up as well. It’s all about taxing based percentages.

  25. Mooka

    What do you think is going to happen to
    the price of fuel when Coles and Woolies
    have eliminated all of the competing fuel
    sellers?
    They are playing a long game. Short term pain
    for the long term gain of having the whole fuel
    market stitched up . Are you so niave enough not to
    see this?

  26. Sinclair Davidson

    Are you so niave enough not to see this?

    Basically, yes. Of all the things that can happen, I am not worried at all about Coles and Woolies stitching up the market. If fact for as long as they keep trying to do consumers will be better off.

  27. Barry

    One of the parts of the agreement between the ACCC and Coles/Woolies was to end cross subsidization of groceries-petrol as of 1/1/14

    The price rise you see on 1/1/14 is a result of the removal of this subsidy, combined with the regular cycle jump. Recently the cycle jump has been about 14c, so I assume that the additional jump to get to 20c increase was the efffect of the grocery subsidy of the petrol price.

  28. Myrrdin Seren

    There is a psychological aspect here that the pollies are playing to as well.

    Motorists need fuel but HATE paying for the stuff. We value it as a kind of second-tier priority I guess.

    For instance – folk complain about the price volatility. ( Put aside the reason prices move around for a moment ).

    Big energy producers like the oil companies, or theoretically even the banks, could hedge the transport fuel prices and the exchange rates, and probably offer a fixed price deal if the punters were prepared to commit.

    However, the psychology of fuel prices is such that the moment the spot price moved under the fixed price, the punters would be howling.

    This is why the idea of long term pricing has pretty much gone the way of the quill pen in big energy markets like coal and LNG. If large power utilities and their owners can’t hack more than a 12 month price horizon, and usually just spot prices now apply in a lot of the coal trade, then no wonder the tradies and ‘burban folk won’t wear it.

    So around we go on the price merry-go-round.

  29. .

    The Federal Government takes 38.1 c.p.l. plus GST on the “untaxed” sale price plus GST on excise.

    That is after the operators have paid rates, stamp duties, payroll taxes, franchise fees (a tax), possibly developer fees and you pay this price after you have paid income tax.

    The idea that anyone else but the Government is making money hand over fist with fuel from well to do consumers is a cruel joke.

  30. rebel with cause

    Perhaps some sort of government fuel watch website coupled with restrictions on how often prices can be changed would stop these fuel companies from gouging us. Better yet, the government should get the ACCC to do a proper enquiry into fuel prices – you can’t tell me that there isn’t collusion going on when all the prices move together! It is as if prices are being communicated through some sort of system – the ACCC should really take a good look and find out what type of system it is that results in this coordination of action.

  31. .

    The companies aren’t gouging you, the Government is. The retail and wholesale margins are nothing special.

    Prices drop at the same time because the players are rational, responding to supplier and consumer actions that impact them all.

  32. Leo G

    Prices drop at the same time because the players are rational, responding to supplier and consumer actions that impact them all.

    Prices can also drop because the composition of the fuel is allowed to varying within certain limits over time. Buy at the wrong time in the cycle and you could be using fuel with 5% to 10% lower energy density. If your very unlucky you could buy at an outlet using one of the petrol pump rate multiplier scams where you get slugged for more fuel than the pump actually delivers (up to 15%).

  33. .

    So if I get cheap fuel I’m buying gummy crap with varnish in it, as the more volatile compunds have degraded?

  34. Leo G

    So if I get cheap fuel I’m buying gummy crap with varnish in it, as the more volatile compunds have degraded?

    The lower density fuel has lower levels of napthas and higher levels of aromatics and alkenes. When the government changed the definition of petrol to accommodate ethanol blends, it introduced time-averaging in the regulation of the limits of other components such as aromatics etc in all petrol.

  35. Pedro

    Leaving aside the obvious stupidity, the worse aspect of this is the sort of power that the vague provisions of the CCA give to the ACCC. No offence has been committed but Sims still has enough power to strong arm the supermarkets into following his requirements. This is an ever increasing problem in our regulations as Govts try to micro manage the problems reported on a current affair etc.

  36. Mooka

    SD,what do you think is going to happen when the big two have
    control of the fuel market? They already effectively control
    the food market- the same food items in NZ are 30% cheaper
    than in Australia .
    We are being screwed and a bunch of people imaging that
    getting a few cents a litre of their fuel is a something we have to protect
    If you get tank of fuel a week you are saving about three dollars,
    you don’t think that they more then make up for that in overpriced
    groceries? I save fifty dollars a week by shopping at Aldi.

  37. .

    New Zealand wages are also lower. Is that PPP corrected?

    Woolies and Coles will never control retail food supply. There is actually plenty of competition. Less likely is retail fuel supply.

    In Australia, what they have done which is very cartel like is control the liquor industry – which the relevant legislation either demands or facilitates.

  38. Oh good, my groceries should be slightly cheaper now. It’ll be nice to not be subsidising people who drive a lot when I buy my weekly groceries (well at least, not subsidising as much).

  39. Sinclair Davidson

    I save fifty dollars a week by shopping at Aldi.

    Yep – that’s why Coles and Woolies will never have control over the fuel market, or indeed any other market. New entrants.

  40. Also, I should get cheaper petrol too since I have been paying the artificially* increased prices whenever I forget to have a docket with me.

    * – artificially increased to create the illusion of a ‘discount’.

  41. .

    The only thing that is illusory is your memory, pal.

  42. Pedro

    If you want to compare to NZ then you want to look at relative rents as well. Very high here compared to US and I expect other places as well.

    I don’t think anyone would try and argue that we couldn’t get more and better competition in Oz leading to lower prices. Or that the removal of fuel dockets will result in a significant net loss of competition between the supermarkets, it will just be different. But I’ve no doubt that Sims has solved a non-problem and that more of his “help” along those lines will be a bad thing. If competition is increased in fuel retailing it won’t be expressed through lower prices relative to leaving well enough alone.

Comments are closed.