- Fuel prices in Australia have slumped below $1 since the global pandemic began
- But retailers have been paying wholesale prices of about 80 cents per litre
- The difference in what retailers have been paying and charging is 24c per litre
- Retailers said they have been struggling to pay staff due to a decline in sales
- Here’s how to help people impacted by Covid-19
Servo owners have insisted they are not price-gouging despite making record profits on fuel.
Petrol prices in Australia have slumped since the COVID-19 pandemic began with the average cost of unleaded fuel dropping to 98.2 cents last week.
But retailers have been paying wholesale prices of little more than 80 cents a litre – the lowest in 20 years – and charging motorists an extra 24.6 cents.
Despite record-high profit margins, service station owners say they have been hit hard by lockdown measures rolled out to contain the deadly virus and are struggling to make ends meet.
Stan Karalis is the owner of three service stations in South Australia and said petrol sales plunged by 70 per cent after residents were forced to stay in their homes to help curb the spread of the virus.
Mr Karalis told the ABC he has been taking out high-interest bank loans to pay $100,000 per fortnight in wages until the federal government’s JobKeeper scheme comes through.
Chief executive officer of the Australasian Convenience and Petroleum Marketers Association Mark McKenzie told the publication that thousands of service station owners are in Mr Karalis’ position.
‘In recent weeks, we’ve actually seen service stations in areas like regional WA, regional NSW and regional SA that have reported falls of between 75 per cent and 80 per cent of their revenue, most of those are located in tourist areas.’
He explained the financial pressures have made it difficult for retailers to pass the low fuel prices on to dwindling numbers of consumers.
Mr McKenzie also pointed out that many retailers in regional and low fuel consumption areas won’t benefit from the reduced prices until the older and more expensive petrol in their tanks is sold.
According to the Australian Institute of Petroleum, fuel costs in Australian cities slumped to an average of 94.9 cents per litre and 105.1 cents in regional areas.
Petrol price around Australia
PERTH: 0.86 cents a litre
MELBOURNE: 0.89 cents a litre
SYDNEY: 0.95 cents a litre
BRISBANE: 1.0 cents a litre
ADELAIDE: 1.01 cents a litre
CANBERRA: 1.01 cents a litre
DARWIN: 1.16 cents a litre
HOBART: 1.22 cents a litre
Source: FuelPrices Australia
But Geoff Trotter – the owner of petrol-price-monitoring company FuelTrac – told the ABC that prices above 99 cents per litre are unfair on the consumer.
‘I consider anything above 99 cents a litre over the top in terms of profit margin and anything below 99 cents would be a fair price for the oil company, for the dealer and certainly for the motorist.’
The Australian market is dominated by ‘price cycles’ – where the cost of fuel will fall steadily for about two weeks, before a sharp increase.
Discounts and surges hit capital cities around the nation at different times, ensuring oil companies achieve higher profit margins consistently throughout the year.
According to the Australian Competition and Consumer Commission, these price changes are not necessarily related to changes in wholesale prices.
This phenomenon doesn’t exist anywhere else in the world.
CommSec senior economist Ryan Felsman said fuel costs are still higher in some parts of Australia because price cycles and are still in place in spite of the pandemic.
‘Queenslanders that were making the most of an easing in COVID-19 restrictions over the Labour Day long weekend would’ve noticed that petrol prices in some suburbs and towns hit $1.20 a litre,’ Mr Felsman said.
He also said unleaded pump prices have also lifted to around $1.20 a litre in Sydney’s inner-west, eastern suburbs and north shore, signifying the end of the area’s discount cycle.
Extracted from Dailymail