OPEC deal threatens new slug to drivers’ wallets

CHRIS KOHLER
December 2, 2016
The Australian

Motorists could be forced to shell out 6c to 8c a litre more for petrol thanks to an agreement between the world’s biggest oil producing nations, according to the NRMA, which says Australian drivers are already being ripped off by big ­petrol retailers.
The Organisation of Petrol Exporting Nations this week reached an agreement to cut crude oil production by 1.2 million barrels a day, representing about 1 per cent of global production.
The spotlight, however, has quickly shifted from the macro-economic impacts of the move to questions of what this means for local drivers, and the news is not good. “The cutting of production doesn’t start until January 1, so we’re hoping our forecasts for Christmas still hold,” NRMA spokesman Peter Khoury told The Australian.
“If the cutting of production eventuates, and there are a couple of non-OPEC nations that need to sign on, it could lead to an increase in prices of between 6 and 8 cents.”
The move to manipulate the oil price through supply cuts seeks to serve the interests of countries such as Saudi Arabia — the world’s biggest oil producer — Iraq, Iran, Nigeria, and several others, by keeping supply tight and prices high, without negatively affecting their own competitive positions.
The landmark deal could kick Australian motorists while they’re down, with the consumer watchdog already scolding petrol retailers for gouging customers.
“We remain concerned about the petroleum industry’s high gross retail margins, which indicate motorists are not reaping the full benefits of lower international crude oil and refined oil prices,” Australian Competition & Consumer Commission chairman Rod Simms said recently.
With petrol prices threatening to rise as a result of the latest OPEC agreement, the NRMA has warned that drivers need to be aware of the vast difference in ­retail prices — it says that the gap between a city’s cheapest and its most expensive service stations is usually about 30c a litre.
“When the ACCC quotes profit margins, they’re quoting the average profit margin for the sector,” Mr Khoury said.
“What the public needs to understand is that there are two competing strategies regarding petrol in Australia: first, the major (petrol) companies — the Coles- and Woolworths-aligned service stations — where the bulk of the profits are being made because they tend to be more ­expensive.
“And second, the independents, which are consistently the cheapest — sometimes between 20-30c per litre.”
National legislation was recently amended to force petrol ­retailers to post their prices online in real time, which has prompted mobile phone apps that keep drivers informed about where to get cheap fuel.
The NRMA calls the reform “the most significant in the history of the Australian petrol industry”, and says drivers who use the apps can save between $500 and $1000 a year on petrol.
Sydney’s drivers tend to make the situation worse for themselves by unnecessarily spending extra on premium fuel, which makes up 54 per cent of sales in the NSW capital, compared with 23 per cent in other states.
“Unless you’re driving a high-performance vehicle or something built before 1986, you don’t need to use premium,” Mr Khoury said.
“You really are just taking money out of your own pocket and giving it to the oil companies, and I’m not sure why.”

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