Opposition demands review of diesel price spike

Diesel prices remain “extraordinarily” high compared to petrol, as Opposition demands ACCC review

By Samantha Freestone

Diesel prices are "extraordinarily" high and do not weigh-up against petrol prices, Federal Shadow Minister for Transport Warren Truss says.

He is demanding the Australian Competition and Consumer Commission (ACCC) investigate the discrepancy between petrol prices and the price of diesel.

Traditionally diesel has been cheaper, he claims, and the reasons for the increase given by oil companies offer no "credible" excuse.

"Until the last couple of years, diesel has traditionally been substantially cheaper than petrol. While petrol prices have fallen in recent times, the price of diesel remains extraordinarily high and the gap between petrol and diesel has widened," he says.

Truss has written to ACCC Chairman Graeme Samuel requesting an immediate investigation into the retail price of diesel.

He cites the Asian economic boom - as Australian petrol, crude and diesel prices are determined by Singaporean price models - not a worthy reason to justify why "price distortions" continue to impact on industries dependent on the fuel.

"While large scale users of diesel in Australia such as the mining industry and big transport companies are naturally able to purchase diesel at discount prices, local motorists with diesel powered vehicles seem to be bearing the full brunt of the price distortions," he says.

"The ACCC should not just be patting the fuel companies on the back for price reductions for unleaded petrol. They should be asking why isn’t the price of diesel coming down as well?"

The most recent figures on national fuel prices from the Australian Institute of Petroleum (AIP) show the national average for wholesale diesel last week rose by 2.5 cents to 116.2 cents per litre.

Encouragingly, retail diesel fell by 1.2 cents last week to 126.9 cents per litre.

A spokesperson for AIP says there is a short-time lag of one to two weeks between changes in Singapore prices and changes in Australian prices.

"Importantly, this time lag occurs whether prices are going up, when the lag slows price rises to consumers, or prices are going down when the lag delays price falls," he says.

"The lag is a result of using a rolling average of Singapore prices as part of the wholesale pricing methodology."

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