Editorial: Watchdog describes Brisbane’s fuel cycle as baffling

The Editor
October 9, 2017
The Courier-Mail

AUSTRALIAN Competition and Consumer Commission chief Rod Sims has one word for Brisbane’s fuel price cycle. He says it’s “baffling” and can find no rhyme nor reason for it.
In a report issued today, Mr Sims sets out in infuriating detail what motorists in southeast Queensland know and experience every driving day. This metropolitan capital takes first prize for high petrol prices across the country, with consumers suffering an unnecessary and additional bill of some $50 million a year.
According to the ACCC report, the lack of competition is squarely to blame with the dominance of the major operators.
A top-heavy marketplace has put the average net profit for service stations in and around Brisbane at 55 per cent above that in other states.
At a time when cost-of-living pressures are making every dollar count and causing households to follow strict budgets, this is an unfair and, in many respects, unacceptable state of affairs. The ACCC says smaller independent outlets, which drive much of competitive pricing seen in other capital cities, have a significantly smaller share of the total number of service stations in Brisbane.
This is the reason the big service station operators – usually setting prices in offices far away from the driveways customers use – are able to dial the per litre cost up over $1.30 towards $1.50.
At the moment, according to the ACCC, the lack of real competition in the Brisbane market means average prices at independents here are just 1.3¢ a litre below the market average while in Sydney these prices have a discount of about 3.8¢ a litre, primarily because of that additional layer of outlets not tied to the major petrol companies.
It is clear that Brisbane needs new players, like Westside, Budget, Metro and Speedway who trade in New South Wales, to drive further competition.
Mr Sims says he put the results of his investigation – which followed a Queensland fuel summit prompted by a campaign waged by The Sunday Mail and The Courier-Mail – to the fuel companies but the responses were disappointing.
“Most retailers stated that they were unable to provide an explanation, with a few noting that their pricing policy was to follow the market,” he said. This is code for ‘we do it because we can’.
The current situation should not be allowed to stand. Consumers have to play a role as do state and local government authorities. First, we need to reward good behaviour by petrol companies and punish those who continue to price gouge.
Consumer websites such as GasBuddy and MotorMouth are easily accessible tools to compare and contrast price information – even if too often it just confirms there is marginal difference between costs at service stations close by. However, if consumers do not go to those outlets in the top two price brackets they will quickly lower the bowser cost.
We also need to demand greater competition and ask local and state government to do more to get additional, independent outlets in the suburbs. Without interfering in the market, there should be ways to
open up some land for extra fuel retailing.
There’s no reason government can’t work with the smaller, independent companies to encourage them to expand in Brisbane so that the metropolitan market here can more mirror what’s seen in Sydney and Melbourne.
The confounding Brisbane fuel price cycle remains a mystery despite Mr Sims’ detailed inquiries. He says quite rightly that fuel prices shouldn’t be regulated but he is at a loss to explain the ups and downs of petrol pricing.
“It is one of life’s most baffling unknowns,” he said. “It drives motorists mad. They feel they are being ripped off and it does the industry enormous damage as a result.”
That sense of outrage needs to be turned into consumer power, demanding an end to price gouging and calling for greater competition in what has become a very comfortable marketplace for a select few.