Key points:
- The ACCC says there is no legislation that prevents high prices
- The margin between wholesale and retail prices in Darwin is currently 35 cents
- The NT Chief Minister has threatened to legislate a cap on fuel price margins
The Chief Minister says he will take “extreme measures” to reduce fuel costs in the NT after the Australian Competition and Consumer Commission [ACCC] confirmed Territorians were paying more than it would expect during an unprecedented fall in global prices.
Flagging the prospect of a legislated cap on the margin between wholesale and retail prices, Chief Minister Michael Gunner said he was “fed up with the excuses and inaction from the petrol giants”.
A similar ultimatum was recently made by the ACT Chief Minister, Andrew Barr.
“I will take extreme measures if necessary. I will make new laws if I have to,” Mr Gunner said.
“So the petrol giants [should] consider this my first and final warning. Cut your prices or I will cut them for you.”
While motorists in some capital cities can currently fill their tanks for less than $1 per litre, the average price of unleaded fuel in Darwin is still above $1.16 per litre, according to the NT Government’s MyFuelNT website.
The average price across the NT is even higher, at more than $1.50 per litre.
At petrol stations in Darwin, drivers told the ABC they were being treated with contempt.
“We’ve always paid more and it’s not fair,” motorist Amber Atterton said.
Steve Whitaker went further, suggesting drivers were being swindled.
“The fact that eastern states are paying 90 cents in some places [shows it’s] a rip-off and a rort,” he said.
“It’s price gouging at its finest.”
While the ACCC did not suggest price gouging was taking place, it did tell a Public Accounts Committee hearing at the NT Parliament that fuel costs in the Territory were above what they would anticipate during a climate of falling international oil prices and reduced fuel demand.
“It is the view of the ACCC that the prices in the Territory are higher than we would expect them to be based on the wholesale prices,” the ACCC’s general manager of infrastructure and transport, Matthew Schroder, said.
The committee heard the current difference between the wholesale price and the retail price in Darwin was about 35 cents per litre.
Before the recent fall in global oil prices and the onset of coronavirus pandemic, the difference had been around 5 cents.
“We think that there has been probably a retention of [higher] margins beyond what would be justified by normal lags,” Mr Schroder said.
While the ACCC had the power to prosecute over price-fixing and collusion, Mr Schroder told the committee that, without evidence, it could only monitor and advise consumers about inflated prices.
“There is no legislation that prevents high prices,” he said.
“This is a capitalist economy. Retailers set the prices.”
Mr Schroder told the committee there were several reasons why there was often a lag between falls in international prices and the local bowser price.
One of those reasons was the need to exhaust existing supplies before offering cheaper prices to consumers, he said.
The CEO of the Australasian Convenience and Petroleum Marketers Association, Mark McKenzie, told the hearing coronavirus restrictions had resulted in a 50 per cent fall in retail fuel sales volumes across the country since late March.
To survive the crisis, fuel companies needed to price their products accordingly, Mr McKenzie said.
“The fuel retail industry is just that — a retail industry where if it actually gets significant falls in volumes of sales, the business has one of two choices: either to close up its doors or to actually find ways to recover the unit costs.”
Mr McKenzie said Darwin’s fuel price margins were, until recently, among the lowest in the country and that falls in the city’s average retail price over the past eight weeks were not too dissimilar to those in some other smaller-sized capitals.
“I would argue, or venture to suggest, that a 16 per cent reduction is pretty well comparative to what we’re seeing in Hobart at 19 per cent and Brisbane at 20 per cent,” he said.
Other fuel companies told the committee they faced higher rental, storage and transport costs in the Northern Territory.
Extracted from ABC