News

Australian Petrol Prices Still Too High

10.11.2005

Australian petrol prices have reached historically high levels against international benchmarks, in direct contrast to claims that high prices are an international reality.

 

The Australian Automobile Association (AAA) today released figures which show the gap between the international petrol price benchmark, MOGAS, and prices in Australian capital cities were at record highs during October 2005.

 

AAA Director of Research and Policy, John Metcalfe, said the figures refute claims from oil companies, the federal Government and the Australian Competition and Consumer Commission that the high petrol prices were purely the result of international price movements.

 

“Conventional wisdom is that petrol prices inAustraliaclosely follow the Singapore MOGAS 95 unleaded petrol price - that’s the price the ACCC uses as its benchmark for assessing domestic retail prices,” Mr Metcalfe said.

 

“Despite claims linking Australian prices to international prices, the margin between retail prices in Australian capital cities and the MOGAS price was significantly higher during October than the average margin for the previous 21 months.

 

“Even allowing for the fact that margins tend to vary over time, these figures show motorists in Australian capital cities were paying well above the international benchmark.”

 

Mr Metcalfe presented the following price differentials between MOGAS and capital city prices (cpl):

 

City

Jan 04 to Sep 05 Average

October 05

  • Brisbane

50.1

58.5

  • Sydney

59.3

66.8

  • Canberra

60.3

73.4

  • Melbourne

57.1

66.5

  • Hobart

64.9

75.7

  • Adelaide

58.8

67.1

  • Perth

56.8

65.5

  • Darwin

64.8

77.2

 

Mr Metcalfe said the differential between MOGAS and, for example, theDarwinretail price, includes Government excise (38.1cpl), GST, freight (fromSingapore), insurance, handling and the oil companies’ margins.

 

“Based on the longer term average, capital city retail prices during October ought to have been between 7.5cpl and 13.1cpl lower than they were.

  

“These figures call into question claims by oil companies that there is intense competition in capital cities.

 

“If competition is so intense, why is it that our prices are so much higher than the international benchmark?

 

The figures released by the AAA indicate that the difference between the October margin and the longer term average was highest in Hobart (10.8cpl),Darwin(12.5 cpl) andCanberra(13.1cpl).

 

“These three cities are not even included in the ACCC’s weekly petrol pricing snapshot,” Mr Metcalfe noted.

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