Petrol prices dip slightly in 2013, but retailers' profits soar
Profits raked in by the petrol majors have continued their decade-long trend and rose by 19 per cent last financial year.
Meanwhile, the mysterious petrol price cycle, which seems to push up prices just before a public holiday or long weekend, has become longer and harder to predict, the competition regulator has found.
In its latest report on the petrol market, the Australian Competition and Consumer Commission has raised again the spectre of whether price-sharing arrangements in the retail petrol sector might be in breach of competition rules, with that probe nearing completion.
The ACCC's report, released on Wednesday, reveals average annual retail petrol prices in 2012-13 were slightly lower than in 2011-12. The average retail price of regular unleaded in the five largest capital cities for 2013 was 141.3¢ a litre, down from 142.8¢.
The retail sector earned net profit of $534.9 million in 2012-13, an increase of 18.9 per cent in real terms from 2011-12.
"Total profits ... have been on an upward trend since 2002-03," the ACCC said. "This trend has been particularly strong since 2008-09, with total net profits increasing by around 114 per cent in real terms in the five years to 2012-13."
The ACCC found that the price cycle, the way petrol prices rise and fall through the week or month, has blown out from a weekly cycle several years ago to between 13 and 19 days, on average.
"The lengthening and increasing variability of price cycles has made them less predictable and more difficult for consumers to take advantage of low points," it said.
The ACCC said independent fuel chains had increased their market share despite a growing stranglehold by Woolworths and Coles, which combined now controlled 48 per cent of the market.
Last week, the ACCC struck a deal with Woolworths and Coles to cap their petrol shopper docket discounts at 4¢ a litre in response to concerns the supermarket chains' excessive discounting, as high as 45¢ a litre and subsidised by grocery sales, was driving out competition.
Frequently Asked Questions about this Article…
Despite the perception of rising petrol prices, the average retail price of regular unleaded petrol in the five largest capital cities actually decreased slightly in 2013 to 141.3¢ per litre, down from 142.8¢ in the previous year.
Petrol retailers have seen a significant increase in profits, with a 19% rise in the last financial year. This continues a decade-long trend, with total net profits increasing by around 114% in real terms over the five years leading up to 2012-13.
The petrol price cycle refers to the pattern of petrol prices rising and falling over a period. It has become longer and more unpredictable, extending from a weekly cycle to an average of 13 to 19 days, making it harder for consumers to take advantage of low prices.
The Australian Competition and Consumer Commission (ACCC) monitors the petrol market to ensure fair competition. They have raised concerns about price-sharing arrangements and have been investigating potential breaches of competition rules.
Independent fuel chains have managed to increase their market share despite the dominance of major retailers like Woolworths and Coles, which together control 48% of the market.
The ACCC reached an agreement with Woolworths and Coles to cap their petrol shopper docket discounts at 4¢ per litre. This was in response to concerns that excessive discounting, previously as high as 45¢ per litre, was harming competition.
The petrol price cycle often sees prices increase just before public holidays or long weekends. This pattern has been noted by the ACCC, although the exact reasons for this timing are part of the broader unpredictability of the price cycle.
The lengthening and increasing variability of the petrol price cycle make it more difficult for consumers to predict and take advantage of low price points, potentially leading to higher overall fuel costs for motorists.
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