How Petrol Stations Are Making It Harder To Find 'Cheap Days'

Petrol isn’t cheap: the average cost in Australia over the last year was 143 cents a litre. When weighed up against other locations, Australia still comes out as one of the less expensive OECD countries, but shifty behaviour by retailers means it’s getting harder and harder to buy petrol at the lowest price point.

Image courtesy of Shutterstock

Those are the most notable conclusions from the Australian Competition and Consumer Commission (ACCC) annual report into unleaded petrol pricing in Australia, which was released today. The report is based on the ACCC’s regular monitoring of petrol prices in the five major capital cities. Undoubtedly remote rural consumers will pay more, a factor the commission acknowledges, while pointing out that lower volumes and longer transport distances mean that isn’t actually a totally unreasonable outcome.

Capital city petrol prices have gone up substantially over the last ten years, but that increase is in line with the overall international Singapore Mogas benchmark price. As the announcement of the report points out: “Over the last decade the average retail price (excluding taxes and subsidies) has risen around 120 per cent, while the price of Singapore Mogas 95 has risen around 122 per cent.” Supply shortages and unrest in the Middle East were major factors in dictating crude oil prices, the ACCC noted. “Even with the recent increases, petrol prices in Australia remain among the lowest in the OECD,” the report noted.

That remains true even when local taxes, a major component in petrol prices, are included. This chart shows the amount (in Australian cents per litre) charged for petrol and tax in OECD countries:

The exclusion of taxes and subsidies does mean it’s hard to make direct comparisons for individual consumers. By the ACCC’s reckoning, the international price of petrol plus taxes accounts for 88 per cent of the cost, while local wholesale and retail charges account for just 12 per cent. (Just try asking Apple shareholders if they’d be happy with sub-12 per cent margins.)

Not much of that actually stays at the pump. A typical retailer makes 1.5 cents for every litre of petrol sold. When convenience stores (which typically don’t employ supermarket-based discount coupons) are included, that figure rises to 2.4 cents. That’s still hardly enormous, and convenience stores represent a small proportion of the local market. But consumers won’t feel sorry for petrol stations. We’re too busy trying to work out how to not get totally rorted.

How Cheap Tuesday Died

The ACCC’s announcement points out, yet again, that drivers find the highly variable pricing for petrol on any given day confusing and annoying. As we’ve noted before, the cheapest day shifts on a regular basis, so you need to regularly assess your buying habits. This sucks, unquestionably, but it seems unlikely to change. Indeed, the report points out that in the eastern states, the situation is worsening, and it’s almost impossible to predict a “cheap day”:

The duration of price cycles in the eastern capital cities has been increasing over the last few years. In 2009 the average duration of price cycles in these cities was around seven days, whereas it had increased to over 12 days by the end of the September 2012 quarter. This has made the price cycle less predictable and means that it is not as easy for consumers to take advantage of the low points in the cycle. ACCC analysis has shown that the upward phase has generally been led by BP or Caltex.

The big exception to this rule is Perth. WA regulations require fuel prices to stay stable for 24 hours and to be published on the FuelWatch web site. That would be a welcome development in other states.

The ACCC began an investigation into whether petrol suppliers are illegally colluding to share price plans in May this year, but that investigation is expected to take some time. The ACCC is also investigating the potential effect of the widely-used supermarket discount docket schemes on pricing. (47 per cent of Australian petrol sales are through Woolworths or Coles-branded stores.)

We know that many countries in the world pay much higher prices for petrol (and that comparing prices on their own is meaningless if you don’t also consider income levels). Picking the right points in the petrol sales cycle to buy cheaply will save you money, but the most reliable way to reduce petrol costs is to drive less. I can’t see that happening — every time we mention this on Lifehacker, the comments flood with people pointing out their utter car dependency — but it is by far the most reliable method.

ACCC Petrol Report

Have you subscribed to Lifehacker Australia's email newsletter? You can also follow us on LinkedIn, Facebook, Twitter and YouTube.

Trending Stories Right Now