Petrol and diesel price rises between 20 February and 11 March varied widely between Australian capital cities and in many cases have increased as fast as wholesale prices and in some cases by a greater extent, the ACCC's new weekly fuel price monitoring update has shown.
The first weekly pricing update to be provided by the ACCC during the current Middle Eastern conflict also shows Australian refined international petrol and diesel benchmark prices have increased more than international oil prices during the initial period of the conflict. International benchmark prices movements drive domestic wholesale prices, which then influence retail prices.
The update shows that Darwin had the highest daily average petrol and diesel retail prices among the eight capital cities on Wednesday this week, while Canberra had the lowest. Between 20 February and 11 March Perth experienced the largest increase in average retail petrol prices of 59.5 cent per litre (cpl).
We know that there have been significant price increases in regional locations and while this first weekly update focuses on the eight capital cities it will expand to include 190 locations across Australia from next week.
Average retail petrol prices in Sydney, Adelaide and Hobart on 20 February were comparatively lower than other capital cities, but have since increased to levels similar to other capital cities.
Pricing data also shows that after the start of the current conflict in the Middle East, daily average retail petrol prices increased with higher wholesale prices almost on the same day, rather than showing a usual lagged response.
"The data we have published today underscores our concern about the movements of prices at the bowser for Australian consumers and businesses in comparison to international prices," ACCC Commissioner Anna Brakey said.
"The impacts on average retail petrol and diesel prices varies between cities, and average prices are changing daily. The market is highly complex and volatile, which we know is adding to consumer concerns."
"We know that many consumers are doing it tough and are frustrated by the rapid changes they have seen. We expect petrol retailers to explain to us and the Australian public how they have arrived at their prices," Ms Brakey said.
The ACCC wrote to petrol companies including 7-Eleven, Ampol, bp, Chevron, Mobil, United Petroleum, Viva Energy and EG Australia last week seeking urgent information about recent price increases. After reviewing their responses, the ACCC will require further clarification in a meeting with fuel market participants next week.
"Fuel companies should be open and honest about the reasons for such widely varying and rapid increases across the country and treat their customers fairly," Ms Brakey said.
"We urge petrol retailers to explain their positions to the Australian community."
The ACCC will take action for misleading or deceptive conduct about the reason for the steep and rapid increase in prices by individual retailers, or breaches of competition laws.
"We welcome government plans to move to increase the maximum penalties for relevant breaches of Australian Consumer Law and the Competition and Consumer Act from $50 million to $100 million and will seek the highest penalties appropriate in any cases we bring to the courts."
"We continue to provide updated information for consumers on our website. Consumers can also use fuel apps to shop for fuel, to find retailers with lower prices and reward them for offering a better deal."
Supply measures
The ACCC is concerned about petrol and diesel availability in some regional and rural locations, and has heard concerns from residents, businesses and primary producers about the potential impacts of this situation.
The ACCC participated with a range of industry and government participants in the National Coordination Mechanism meeting yesterday, hearing directly from impacted groups and discussing urgent measures to address national fuel supply issues.
The ACCC continues to engage with industry participants and other agencies on ensuring effective fuel distribution throughout the country and stands ready to assist with its authorisation powers, where it provides a net public benefit.
Changes in petrol and diesel pricing
The data shows that indicative wholesale prices for regular unleaded petrol rose fairly evenly across most capital cities, with Hobart and Melbourne seeing slightly smaller rises than other cities. However, prices at the pump diverged significantly, rising the most in Perth, Adelaide, and Sydney, noting that rises have also likely reflected some petrol price cycle movements.
Price increases at the petrol pump have increased by up to 18 cpl more than wholesale prices in some locations.
Across the five largest cities, daily average retail petrol prices on 11 March were 219.7 cpl, an increase of 48.8 cpl since 20 February.
On 11 March, Darwin had the highest daily average retail petrol and diesel prices among the eight cities, and Canberra had the lowest, while since 20 February, Perth experienced the largest increase in average retail petrol prices (59.5 cpl).
Average retail petrol prices in Sydney, Adelaide and Hobart on 20 February were at a comparatively lower level to other capital cities, but have increased to levels similar to other capital cities.
The divergence in diesel prices is not quite as wide. On 11 March, Sydney had the highest daily average retail prices among the eight cities, and Canberra had the lowest. Over the period since 20 February, Sydney experienced the largest increase in average diesel prices (67.8 cpl).
"Industry need to explain this wide discrepancy urgently," Ms Brakey said.
"Fuel wholesalers and distributors need to be aware that we are ready to hold them to account for breaches of competition and consumer laws and will not hesitate to ask for the highest penalties appropriate under the law."
Lagged movement of prices in the five major capital cities
Analysis of the pricing data shows that following the start of the current conflict in the Middle East, daily average retail petrol prices moved higher in line with higher wholesale prices on almost the same day, rather than showing a lagged response of around 7 or more days, which is more typical when wholesale prices change.
Retail petrol prices generally lag behind changes in wholesale prices, as changes in prices generally only flow through when fuel is replenished at a petrol station.
"In this case it looks like petrol retailers increased prices at the pump when they were selling fuel they had bought before the conflict at cheaper prices."
"Retailers must explain to the Australian public why they did not follow their usual practice, and when they will reduce prices in line with any reductions in wholesale costs."
In addition, the graphics show the impact of the long-running petrol price cycles which operate in the five largest cities. The petrol price cycles differ in timing and length between the cities, shown in price graphs shown below.
More information on petrol [price cycles is available on the ACCC website.
Chart 1 - Sydney daily average retail regular petrol prices, and average terminal gate prices (lagged 7 days)
Source: ACCC calculations based on data from Informed Sources and data published on the Australian Institute of Petroleum website.
Chart 2 - Melbourne daily average retail regular petrol prices, and average terminal gate prices (lagged 7 days)
Source: ACCC calculations based on data from Informed Sources and data published on the Australian Institute of Petroleum website.
Chart 3 - Brisbane daily average retail regular petrol prices, and average terminal gate prices (lagged 7 days)
Source: ACCC calculations based on data from Informed Sources and data published on the Australian Institute of Petroleum website.
Chart 4 - Adelaide daily average retail regular petrol prices, and average terminal gate prices (lagged 7 days)
Source: ACCC calculations based on data from Informed Sources and data published on the Australian Institute of Petroleum website.
Chart 5 - Perth daily average retail regular petrol prices, and average terminal gate prices (lagged 7 days)
Source: ACCC calculations based on data from Informed Sources and data published on the Australian Institute of Petroleum website.
Chart 6 - Canberra daily average retail regular petrol prices, and average terminal gate prices (lagged 7 days)
Source: ACCC calculations based on data from Informed Sources and the MotorMouth website, and data published on the Australian Institute of Petroleum website.
Note: Sydney terminal gate prices are used as a proxy for Canberra.
Chart 7 - Hobart daily average retail regular petrol prices, and average terminal gate prices (lagged 7 days)
Source: ACCC calculations based on data from Informed Sources and the MotorMouth website, and data published on the Australian Institute of Petroleum website.
Chart 8 - Darwin daily average retail regular petrol prices, and average terminal gate prices (lagged 7 days)
Source: ACCC calculations based on data from Informed Sources and the MotorMouth website, and data published on the Australian Institute of Petroleum website.
Note
The international benchmark price for refined fuel is the largest component of retail fuel prices. The international benchmark for Australian retail petrol prices is Singapore Mogas 95 (Mogas 95). The international benchmark for Australian retail diesel prices is Singapore Gasoil 10 with 10 parts per million sulphur content (Gasoil 10 ppm).
Both petrol and diesel are refined from crude oil and their prices generally tend to follow similar movements over the long term. However, the different fuels have their own supply and demand characteristics (for example, compared with petrol, diesel also has remote energy generation and industrial uses) and the different refined fuels have their own international benchmark prices. It is these benchmarks that drive retail diesel and retail petrol prices.
Australian retail fuel prices are largely determined by movements in international benchmark refined fuel prices (which are driven by international crude oil prices), and the AUD-USD exchange rate. International benchmark prices movements drive domestic wholesale prices, which then influence retail fuel prices.
Additionally, in the five largest capital cities (Sydney, Melbourne, Brisbane, Adelaide and Perth), retail petrol prices move up and down in regular patterns, known as petrol price cycles. The ACCC website has more information on these price cycles. Retail diesel prices do not move in cycles.
'Terminal gate' or wholesale prices are prices that wholesalers charge for petrol and diesel in the spot market. The major wholesalers post these prices on their websites on a regular basis. Although few wholesale transactions occur at terminal gate prices and actual costs can vary across brands and cities, they are indicative wholesale prices. Terminal gate prices reflect the wholesale price of petrol and diesel only and exclude other retail operating costs.
Background
The ACCC is an independent statutory government authority and Australia's peak consumer protection and competition agency.
The ACCC uses a range of tools to promote compliance with the Competition and Consumer Act 2010 and the Australian Consumer Law.
This includes commencing proceedings in the Federal Court for alleged breaches of the Act.
