Why is diesel so expensive? Retailers charge 20c per liter more than they should, fuel watchers say
Australians pay about 20 cents per liter more for diesel than they should, consumer advocates say.
And they said there seemed to be no good reason for that.
Federal Treasurer Jim Chalmers said Australians were “really dirty” about higher fuel prices.
While prices have declined, experts say diesel prices have not fallen enough.
But retailers say there is always a lag between the drop in oil prices seen at the pump.
Even if you don’t own a diesel vehicle, you may be affected by the price of diesel.
That’s because it’s the fuel of choice for industry — transportation, agriculture, shipping, and mining — which means there are after-effects for the economy.
Why is diesel so much more expensive than gasoline?
Oil prices soared earlier this year after Russia was sanctioned for its invasion of Ukraine.
Diesel prices rose more than gasoline due to various factors including higher demand due to the COVID-19 economic recovery and less supply from Russia.
Between mid-April and late June, wholesale prices for gasoline and diesel rose by about 48 cents per liter and about 57 cents per liter, respectively, according to the Australian Competition and Consumer Commission (ACCC).
The ACCC said prices began to fall late last month, with wholesale prices of gasoline and diesel dropping by about 35 and 30 cents per liter respectively in the weeks to July 20.
Over the same period, the ACCC said retail diesel fell between 14 and 5 cents per liter in Australia’s five largest cities.
Bro, how much is the wholesale price?
Most of the fuel in Australia comes via Singapore.
The prices sold there are wholesale prices, or terminal gate prices.
Currently, the wholesale price of diesel is about 30 cents per liter higher than gasoline.
So is that why diesel is so much more expensive than gasoline?
It depends on who you ask.
Fuel watchers are concerned about the difference between the wholesale price and retail price of diesel (the price you pay for fuel at Bowser).
“Usually wholesale prices for gasoline and diesel are about the same,” said Ian Jeffreys of the Royal Automobile Club of Queensland (RACQ).
“That varies by a few cents, but right now we’re seeing a 30-cent (one liter) difference in wholesale prices.”
The difference between the two prices is the retailer’s profit.
“Most worryingly for RACQ, we have seen a huge increase in retail margins for diesel,” said Dr Jeffreys.
“Usually we expect [the retail margin] to sit at 12 cents [a litre]. Right now it’s exploded to 33 cents,” he said Wednesday.
“[So] diesel prices are about 20 cents higher than they should be, given where we’ve seen the market sit historically.”
He says fuel retailers — the people who run the gas stations where you fill up — don’t pass on the savings they make.
“That’s the key message: Fuel companies see savings … [but] we haven’t seen any savings passed on to diesel users. I think that’s the most concerning,” said Dr Jeffreys.
“Look, [wholesale] diesel prices have fallen in Brisbane and across the state and across Australia, and we haven’t seen retail prices following along.”
Chalmers says that’s what makes Australians so upset.
Oil prices started to fall about a month ago.
“Australian riders, for good reason, are really gross about how when it’s global [oil] prices go up, price increases continue immediately, and when global wholesale prices drop, it looks like it will take longer,” he said.
He said people desperately need help with living expenses.
“Australians are dirty about it and rightfully so. So workshop owners, companies shouldn’t treat Australian riders as mugs,” he said.
“People desperately need help with these cost-of-living pressures.
“So if and when global wholesale prices fall, so do prices on bowser.”
What do retailers say?
Retailers have rejected claims that the industry is pocketing higher margins.
“That’s not true,” said Australasian Convenience and Petroleum Marketers Association CEO Mark McKenzie.
He criticized Chalmers’ comments, saying the lag between falling oil prices and prices at the pump had been firmly established for decades.
Mr McKenzie also pointed to the recent decline in prices.
“Look at the drop in retail prices – they have fallen in Brisbane by 21 per cent,” he said.
He said it came with oil prices rising seven percent in the past week.
Mr McKenzie said the tightness of the diesel market meant that fuel had been decoupled from oil prices.
“So, there is a striking price difference and it is reflected in gas stations,” he said.
“Information supporting these claims is accessible online to anyone who takes the time to access what happened.”
What does this mean for the rest of the economy?
FuelTrac general manager Geoff Trotter said it appears fuel retailers have been holding fuel prices down since June.
Most Australian motorists drive gasoline vehicles, according to the Australian Bureau of Statistics, with only 26 per cent of vehicles having diesel engines.
So, when the price of fuel goes up, a lot of attention goes to the price of gasoline.
Mr Trotter said the higher prices had a flow-on effect for the rest of the economy due to higher operating costs for the industry.
“It doesn’t get media attention but it is an important fuel in our economy because it all flows into the products and food we eat,” Trotter said.
“Only unleaded prices have fallen, but both come from the same product, both from oil.
“Gasoline prices have fallen but diesel seems to have defied gravity.”
What might make the price drop?
Without government intervention, increased competition will have an impact.
Dr Jeffreys said motorists should drive around to keep prices down.
He recommends keeping an eye on price comparison websites to find the cheapest fuel.
The ACCC said it monitors retail fuel prices and regularly reports on fuel prices, costs and profits.
“Where we see a matter of concern, we will examine it closely,” a spokesman said.
“We can force refineries, importers, terminal operators, wholesalers and retailers to provide information on fuel prices, costs and profits.
“If we find sufficient evidence, we take action to protect consumers from misleading and anti-competitive behavior by fuel retailers.”
Will prices go up again in September?
Yes. That’s when the temporary cut on fuel excise ended.
The fuel tax charged on every liter of fuel sold in Australia was cut by 22.1 cents per liter in March to ease cost of living pressures at a cost of $3 billion.
But Chalmers said the fuel tax cuts would expire in just over a month.
“[People] have to assume that the gasoline price waivers occur in September,” he said.
Loading a form…
#diesel #expensive #Retailers #charge #20c #liter #fuel #watchers
Comments
Post a Comment