Increase is coming, but ACCC says fuel prices are fine

Motorists told to brace for another fuel price rise, as the competition watchdog says costs are not too high

By Ruza Zivkusic | December 16, 2010

Drivers are being told to brace themselves for another price hike of 4 cents a litre this Christmas, as the competition watchdog says prices are not too high.

CommSec economist Savanth Sebastian says global oil prices and the strength of the Australian dollar are contributing factors behind the increase.

"Petrol at the moment is a 25-month high since the wholesale price over the past fortnight," Sebastian says.

"The rise in petrol prices to some effect has been offset by the discount of retailers."

A new report released by the Australian Competition and Consumer Commission (ACCC) claims Australia has the fourth cheapest retail prices of OECD countries.

"Australian retail petrol prices continue to closely follow the Singapore Mogas 95 international benchmark," the report says.

"To a large extent the recent strength in the Australian dollar has protected consumers from the effects of higher international petrol prices."

Less than 90 percent of the price motorists paid in the 2010 financial year was taken up by the cost of refined petrol and taxes, it states.

The retail prices during last financial year have been somewhat stable with average prices across the five largest cities, varying from a low of 116 cents per litre in October 2009 to a high of 130 cents per litre in May 2010.

This year has seen significant changes in the Australian petrol industry, with 7-Eleven and On the Run increasing their retail presence after buying Mobil’s retail assets.

"This continues a trend in the market of specialist retailers, including the supermarket chains, increasing their involvement in fuel retailing," the report says.

"Sales of blended petrol have increased, as well as premium unleaded petrol, which is a response to the NSW Government’s ethanol mandate and preparation for the Queensland mandate, which has now been suspended."

The report also shows that independent imports of total petroleum products have increased substantially.

"The proportion of independent imports of total petroleum products has more than doubled to over 10 percent in the last two years. This provides additional competition to the market which will benefit consumers," the report says.

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