Are we being ripped off at the petrol bowser?

The wholesale price of fuel in Australia is about 82 cents per litre, so why are pump prices in some places still about $1 a litre?

Are we being ripped off at the bowser?

Strange times lead to strange outcomes, and one that we’ve never seen before is benchmark US oil prices falling below zero for the first time in history. Yes, US oil producers now have to pay people to take oil away.

So, will we see pump prices in Australia fall to record lows? Don’t bank on it.

For a start, the less-than-zero oil price applies only to contracts for West Texas Intermediate (WTI), a crude oil produced in the US. The WTI price is an indicator of global oil prices, but Australian fuel prices depend on Dated Brent crude oil contracts. At the time of writing, the price for the oil we buy was around $US25 a barrel (just under $40).

The reason for the dramatic fall in oil prices is, of course, the COVID-19 pandemic. Demand has fallen more than six times further than leading forecasters predicted, resulting in a worldwide glut. Producers are desperately trying to reduce production, but it’s not something they can do overnight. Adding to their woes, the sudden drop in demand has left buyers with no storage capacity.

That means the wholesale price of fuel in Australia is currently about 82 cents per litre, which makes it hard to understand why pump prices in many places are well above $1 a litre.

It’s a pity we can’t bulk buy fuel, but for the time being, fuel prices will remain low and should continue to fall. The only unpredictable element is just how greedy retailers will be and, on past indications, they can be quick to capitalise on any opportunity to gouge motorists.

But that staunch defender of buyers’ rights, the Australian Competition and Consumer Commission (ACCC), will continue its ‘outstanding work’ in holding them to account, by “monitoring the market closely” to keep pressure on petrol retailers at this time. Thanks for nothing, ACCC.

Paul Murrell is a motoring writer and creator of seniordriveraus.com, which specialises in “car advice for people whose age and IQ are both over 50”. This article first appeared on seniordriveraus.com

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    COMMENTS

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    Tanker
    27th Apr 2020
    3:52pm
    Surely we are not being ripped off by oil companies? Imagine that.
    Tanker
    27th Apr 2020
    3:52pm
    Surely we are not being ripped off by oil companies? Imagine that.
    panos
    27th Apr 2020
    3:52pm
    It’s a pity we can’t bulk buy fuel.

    Nah the Govt says 20 to 30 days supply is all we need......

    Wait till our supply from overseas is blocked for whatever reason and then we will be at a standstill....... damn idiots we have in Govt Labor or Liberal it dont matter
    panos
    27th Apr 2020
    3:53pm
    Oh I forgot too right we are getting ripped a new one.....
    ozirules
    28th Apr 2020
    10:52am
    I wonder why the government cant take advantage of the low prices to increase our country's stockpile.....best chance they'll ever get
    leek
    27th Apr 2020
    3:58pm
    Sure are getting ripped off. I am happy to name and Shame Shell service station as one of them. I saw the prices on Satruday but did not have my purse with me as i was working. I took my purse on Sunday to work, and bought 98 petrol for 121 less 4c. Then later I saw 98 for 101 at a different Petrol chain. I am really over the price gouging of Shell. I know my fault for going to them. Lesson learnt.
    panos
    27th Apr 2020
    3:59pm
    Woolies and Coles are the worst, has been for ages....
    john
    28th Apr 2020
    11:19am
    They are all the same, but it is a rackett that cannot be fixed when a main beneficiary of the rip-off, is the Australian Mafi, oops sorry , government.
    Hairy
    27th Apr 2020
    4:08pm
    Of course they are ripping us off they have been getting away with it for decades, every long weekend every holiday,just about any excuse you can think of to put price up ,and all with the blessings of your friendly drongo bastard goverment.
    panos
    27th Apr 2020
    4:16pm
    Oh hang on a minute the ACCC the watchdog said there are no collusions amongst Oil companies at all.

    Who ya gonna believe why " Ghostbusters of course "
    Bundabergian
    27th Apr 2020
    4:20pm
    under 80 cents a litre here. Trouble is I am not using any!
    Mariner
    27th Apr 2020
    4:27pm
    Same here mate, just a bit dearer. But cannot use any of it. Just take a photo of the advertised price and cry when the fuel is $2.05 after this crisis.
    Oxleigh
    27th Apr 2020
    4:25pm
    We are being ripped off all the time, The ACCC is a paper tiger since the gov't a few years ago told the ACCC they have no power over the price of fuel, they can sit and watch all they like but they have no power.
    If it eggs or bread watch out but petrol"NO".
    I questioned the ACCC at the time and they sent me an email stating that their hands are tied.
    Regarding the price of diesel, note that the diesel price is no where near petrol, the fact that diesel is cheaper to manufacture than petrol because it comes form the cracker earlier than more processed petrol makes no difference to the crooks that sell it.
    If you note that most emergency vehicles and much needed transport at this time are diesel its the reason they are keeping the price of diesel up higher than petrol.
    So they can profit on the captive audience. Highly immoral.
    On another note do not buy E10 fuel, false economy, the car uses more fuel for the Km traveled, itis useless in low mileage cars because it is hydroscopic, absorbs water, this is not good if your car is sitting around around during these times of no travel, fill the car with premium and keep it full. Other wise you will be up for repairs when it is over.
    Its cheaper to use a better quality fuel and better for your car.
    Tood
    27th Apr 2020
    7:00pm
    Thanks for the advice re E10 Oxleigh
    floss
    27th Apr 2020
    4:36pm
    Strange you can put people under house arrest which is for our own good but you can't touch the oil companies.
    panos
    27th Apr 2020
    4:58pm
    Oh and dont forget they still pay NO TAXES to Australia, they are still writing off losses through their high powered accountants for years and years and our stupid ATO and GOVT lets em get away with it....
    Snowflake
    27th Apr 2020
    4:37pm
    $1-19 here in Latrobe Tasmania today. are we getting ripped off? Big time. If the price of oil goes up, petrol goes up almost immediately. If it goes down you would hardly know for weeks if at all. Governments really need to look into this nonsense and gouging.
    GoldenOldie
    27th Apr 2020
    4:55pm
    I totally agree that we are being rorted on petrol prices, especially in regional Australia where there is less choice anyway or you have to consume more petrol to get to service stations.
    bobm
    27th Apr 2020
    4:51pm
    Bunbury WA. Petrol gouging is at its best here.
    Price of petrol via Fuel Watch WA shows Harvey, a little town some 35kms from Bunbury at 90c/l, Brunswick only 17kms at 92c/l, Waterloo only 8kms from Bunbury 95c/l
    Bunbury 123.6/l. Go to Busselton some 50kms south of Bunbury 1.19/l. The fuel delivery truck has to go through Bunbury to get to Busselton. I ask you why is Bunbury dearer.
    18 months ago RAC in WA negotiated a 4c discount/l of fuel for members at SHELL SERVICE STATIONS in Bunbury. You guessed it the next week the SHELL SERVICE STATIONS put up the price by 4c/l. The deal with RAC meant diddle squat.
    There are two Shell Servos, One on the main Highway to Bunbury and the other on the way out of Bunbury.
    The whole saga has been going on since 1974.I advise anyone who is to come thro Bunbury to buy fuel before Bunbury. DO NOT BUY FUEL IN BUNBURY. Shell is not the only one who jacks up the price. Caltex Woolworths have 3 servos in Bunbury and keep the same price as Shell.
    Spokesman from Fuel Watch WA, on TV last week, had the gall to advise that the turnover is small for each Servo in Bunbury so when they buy Petrol at the higher price from the distributors they have to sell that before the next load arrives and tops up the U/G tanks so the price is high, HE FAILED to mention if the fuel comes in at a lower price the Servos still sell it at the high price until the next fill up to the U/G tanks then they reduce the price, way higher than any other country town nearby.
    I wish I could have the Job of the Fuel Watch WA mouth piece. SAY NOTHING, DO NOTHING and gets a big pay cheque.
    johnp
    27th Apr 2020
    5:15pm
    If the wholesale price is below what it was in the 1970s; then why are we not paying the bowser price of the 1970s ??
    wordsmith
    28th Apr 2020
    10:40am
    Good question. Today's price for Brent crude is $19.49 a barrel (the WTI price is $12.07). That's down from $34.11 on 3 April and $68.27 on 7 Jan. The price peaked 3 October 2018 at $86.29.
    80 plus
    27th Apr 2020
    5:25pm
    cheapest in cairns city $103.9, dearest $117.9, 20 k away @97.8, all from the same bulk fuel storage supplier in Cairns. it is called free enterprise NOT GREED.
    Gazza
    27th Apr 2020
    5:31pm
    The goverment tells the ACCC to sit down and zip there mouth as the higher the price of petrol the more money it has in it"s coffers.
    Gazza
    27th Apr 2020
    5:31pm
    The goverment tells the ACCC to sit down and zip there mouth as the higher the price of petrol the more money it has in it"s coffers.
    Eddy
    27th Apr 2020
    5:39pm
    What is so terrible if service stations are marking up the price of fuel by about 20%. That does not seem excessive to me, particularly in these times when fewer people are buying fuel (I have not bought fuel since 9 March, my usual monthly fuel purchase totals about $220). The 'normal' retail mark-up for most goods is usually between 40% to 50%, in some cases even higher. Retailers running service stations still have their fixed costs (ie rent, utilities, wages etc) which are constant irrespective of the fuel retail price margin. At 20% mark-up I do not see that consumers are being 'ripped off'. In any case if you do not feel the price offered is excessive you have the option of declining to purchase. A few years ago people exercised that choice when bananas went to about $15 a kilo.
    wordsmith
    28th Apr 2020
    10:24am
    Nobody thinks service stations should operate at a loss, Eddy. But 20% of the 82 cent wholesale price (and it's still coming down) is about 16 cents, so fuel shouldn't be costing more than 90 cpl. Prices at 119.9 cpl (and many much higher) is simply gouging. And fuel isn't a discretionary purchase. Unlike bananas, when the fuel price soars, I can't buy something else to take its place.
    FrankC
    28th Apr 2020
    12:01pm
    I thiink the price of fuel here in Latrrobe, ( $1.19 cpl ) is because it is brought across a very expensive Bass strait. I don't know if it comes into Burnie, or Hobart. I would think Burnie, which is only 46 km from Devonport and 54 from latrobe.. Imagine if it was Hobart, that would add to the pricew !
    Wazza
    27th Apr 2020
    5:42pm
    Filled up for 79.9 cpl in Bundaberg today. Can't remember when I last bought petrool for thst price.
    Bundabergian
    27th Apr 2020
    7:26pm
    me too! Kennedy bridge?
    BillW41
    27th Apr 2020
    6:24pm
    81.7c in north-east Adelaide today, less 4c if you have a Drake, Coles or Woolies docket.
    Agree Coles' Shell is usually dearest but then OnThe Run's BP is usually first to rise. Drake's X-Convenience's Mobil is generally the best bet. Woolies' Caltex is consistently cheaper than Shell, especially north of the CBD.
    hooha
    27th Apr 2020
    9:12pm
    several commentaries I have read compare wholesale to retail prices. Is this another?
    Wstaton
    27th Apr 2020
    10:13pm
    I am a bit puzzled by this as according to my "Simples Fuel" The prices are below 90 cents and most down to 86 cents in melbourne. Also the wholesale price includeds excise of 38.145 cents and the final price includes 10% GST.

    Maybe you can explain
    Blossom
    28th Apr 2020
    12:25am
    I know of 4 families who have owned service stations.
    Sometimes they get a bulk delivery of fuel at a high price, then they are told by the Oil Companies they have to drop their price.They rarely managed to buy fuel when it was cheap then be told to increase the price and make a decent profit from it Sometimes the only thing that keeps them profitable is the profit they make on car servicing. All of those families have sold their service stations to cover their losses. I was in the office of one of them once when they got the call from the Oil Company to drop their prices. Their invoice from 2 days before was a higher price than they were allowed to sell it for. That may be why sometimes there is a variation in price.
    Rae
    28th Apr 2020
    10:04am
    I wonder why Indian investors are buying the leases or fuel stations then. There must be some profit or perhaps it's cheap labour? Anyone know?
    Incognito
    29th Apr 2020
    12:03am
    We had Indians buy up the local servo (only one in town) they have cheap labor, don't employ locals but family members.
    johnp
    6th May 2020
    9:34am
    Re. "don't employ locals but family members.". That will not serve them well in the future !!
    mike
    28th Apr 2020
    10:04am
    Well what does it matter, our Gov has sold us out to the chinese, who own our milk supplies, our water allocations, a huge chunk of our food producing land. All our production has been shipped over to China, and they hold us for ransom, so why shouldnt we be ripped of for petrol as well. As long as politicians keep getting their back pockets filled , we the consumer will continue to be ripped of.
    JoJozep
    28th Apr 2020
    10:13am
    "LEST WE FORGET".

    People have said the ACCC looks at petrol price competition between companies, but does nothing about it. Simple. The government earns 40% or so tax on the wholesale price of fuel. Now we wouldn't want that tax amount to diminish would we? So who is the prime pusher of higher petrol prices? Susshh, did someone say the government?
    neil
    28th Apr 2020
    2:23pm
    In the 1990's petrol stations used to work on 3cents per litre profit, now it's at least 30cents per litre. Over the last 50 years there must have been 50 inquiries into petrol pricing, resulting in zilch.
    Neil.
    neil
    28th Apr 2020
    2:23pm
    In the 1990's petrol stations used to work on 3cents per litre profit, now it's at least 30cents per litre. Over the last 50 years there must have been 50 inquiries into petrol pricing, resulting in zilch.
    Neil.
    BillW41
    28th Apr 2020
    5:56pm
    76.9c at X-Convenience in Valley View today, but OnThe Run has risen to $1.19.


    Tags: money, oil, petrol, costs

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