Australia has some of the world's cheapest petrol prices, but not the fairest

Still think petrol is always cheaper on Tuesday? The ACCC says no.

Graph for Australia has some of the world's cheapest petrol prices, but not the fairest

The chart above perhaps best illustrates why Australians feel so hard done by when it comes to fuel prices.

It’s hard to believe that just under a decade ago the price of fuel sat at around 80c per litre. Now it’s hit the $1.45 mark, and is unlikely to fall anytime soon.

This is perhaps why there is so much attention on the Australian Competition and Consumer Commission's latest tussle with the two supermarket giants. This time it’s not about food, it’s about fuel.

Consumers have come to rely on the fuel discounts offered by Coles and Woolworths as a means of buffering the rising cost of petrol. That's why the ACCC's decision to cap discounts for the sake of improving competition is so controversial.

There are a couple of points missing from this debate. And they will likely frustrate consumers much more than an enforced cap on fuel discounts. Despite our frustrations on fuel costs, it turns out Australians are actually getting a rather good deal with petrol prices. We’re not beating the US, but we’re up there.


So good news, right?  We’re not being taken for a ride on fuel prices. Or are we?  

Funnily enough, the rise of discount fuel dockets has also fallen in line with another trend, the extension of fuel retailers' pricing cycle. As we all know, fuel prices change every day. In one cycle, they typically peak at a maximum price for a set limit of time and then also trough at a minimum price as well.

Back in 2009, fuel typically peaked and troughed over a seven day cycle. As a result motorists learned to fill their car up on a weekly basis.

Now, according to analysis from the ACCC, that cycle has stretched out to an average of 15 days. (Except in Perth, where the average cycle length has reduced from nine days in 2009 to seven days in 2013.)


(Source: ACCC)

Now, if you fill up your car once a week and attempt to time it to the trough in the price cycle, you’ll still end up paying at least once during a peak period and once during a trough.

The ACCC hasn’t drawn a line between the rise of fuel discount dockets and the extension of the pricing cycle, as fuel docket discounting started long before the peaks and troughs smoothed out.

As a result, it could be argued that what the majority of motorists would save through fuel discounts is subsidised by those who fail to fill up during a trough price period.

Even if this isn’t the case, the system isn’t very transparent.  According to the ACCC, Perth is the only capital city that actually has a weekday where petrol is cheaper. In case you're wondering, the ACCC says it's Wednesday. Everywhere else, the price varies from day to day, and there isn’t a clear winner, contrary to numerous media reports on the matter.

Australia has some of the cheapest fuel prices in the world, but that doesn’t necessarily mean we have the fairest.

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