Household fuel spend lowest in 30 years

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All of us will be all too familiar with the periodic debate about petrol prices.

This debate is often prosecuted by politicians and motoring associations who appear to use selective facts to allege that petrol prices are too high, raising the profile of themselves and their own organisations in the process.

Public commentary around petrol prices in the lead-up to public-holiday long weekends in Victoria and NSW is a case in point.

Recently, in the lead-up to these long weekends, our industry was again asked to explain why petrol prices had sharply increased – with the allegation being that fuel retailers were gouging motorists with increased fuel prices for the long weekend.

These comments appeared wholly ignorant of ACCC research on public-holiday prices.

Following an investigation of public-holiday petrol prices, the ACCC reported that “our detailed review of prices in the five largest cities around every public holiday found that, on average, public-holiday price increases were no larger than the usual price-cycle increases during the year”.

The Melbourne media justified their criticism on the basis that Melbourne prices were substantially higher than Sydney prices, concluding that fuel retailers in Melbourne were taking advantage of the (AFL) grand final long weekend.

Yet, once again, a quick look at the facts showed that these criticisms were baseless.

An examination of the capital petrol price cycles posted on the ACCC website showed that the differences between Sydney and Melbourne prices were due to the fact that the two cities were at different points in the petrol price cycle – with Sydney at the bottom of the cycle and Melbourne coming off the recent peak of the cycle for the week ending September 29, 2017.

“Our industry accepts that petrol prices will always attract public scrutiny, because petrol prices are a significant input cost for households and businesses alike,” ACAPMA CEO Mark McKenzie said.

“But equally, those commenting on petrol prices have a duty of care to report the facts accurately – as opposed to using selective facts merely to raise their public profile.”

In a recent report on petrol prices, CommSec reported that household expenditure on petrol prices was at the lowest level it has been for more than 30 years. While part of this is due to lower world oil prices, it is worth noting that this result has been achieved despite local costs borne by fuel retailing businesses (ie, wages, electricity, site rents, compliance costs) increasing markedly in real terms over the past 30 years.

Accordingly, the CommSec finding provides testimony to the fact that our industry continues to operate in a fiercely competitive marketplace – contrary to the assertions of some commentators about petrol-price gouging – and is actively implementing productivity improvements where available.

Further, it is worth noting that the CommSec report follows the release of the ACCC June Quarterly Report recently, which found that fuel prices in 2016/17 in real terms were the lowest in 15 years.

“So, while our industry will continue to be attacked on petrol prices in the future, most of these attacks are likely to be premised in selective use of the facts – as opposed to any reasoned and objective analysis of average petrol prices,” Mr McKenzie said.

To cite a well-worn phrase, when it comes to national commentary on petrol prices, it’s a case of “never let the facts get in the way of a good story”.

This is an edited version of an article originally circulated by ACAPMA on October 6, 2017.