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accc.gov.au

Report on the Australian petroleum marketJune quarter 2020

September 2020

Australian Competition and Consumer Commission 23 Marcus Clarke Street, Canberra, Australian Capital Territory, 2601

© Commonwealth of Australia 2020

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� any illustration, diagram, photograph or graphic over which the Australian Competition and Consumer Commission does not hold copyright, but which may be part of or contained within this publication.

The details of the relevant licence conditions are available on the Creative Commons website, as is the full legal code for the CC BY 3.0 AU licence.

Requests and inquiries concerning reproduction and rights should be addressed to the Director, Content and Digital Services, ACCC, GPO Box 3131, Canberra ACT 2601.

Important notice

The information in this publication is for general guidance only. It does not constitute legal or other professional advice, and should not be relied on as a statement of the law in any jurisdiction. Because it is intended only as a general guide, it may contain generalisations. You should obtain professional advice if you have any specific concern.

The ACCC has made every reasonable effort to provide current and accurate information, but it does not make any guarantees regarding the accuracy, currency or completeness of that information.

The ACCC obtains confidential proprietary data from Argus Media under licence, from which data the ACCC conducts and publishes its own calculations and forms its own opinions. Argus Media does not make or give any warranty, express or implied, as to the accuracy, currency, adequacy or completeness of its data and it shall not be liable for any loss or damage arising from any party’s reliance on, or use of, the data provided or the ACCC’s calculations.

Parties who wish to re-publish or otherwise use the information in this publication must check this information for currency and accuracy prior to publication. This should be done prior to each publication edition, as ACCC guidance and relevant transitional legislation frequently change. Any queries parties have should be addressed to the Director, Content and Digital Services, ACCC, GPO Box 3131, Canberra ACT 2601.

ACCC 08/20_20-27

www.accc.gov.au

iii Report on the Australian petroleum market—June 2020

ContentsKey messages 1

1. Developments in the petroleum industry 141.1 The international prices of crude oil and refined petrol decreased significantly in the June quarter to 21 year lows 14

1.2 COVID-19 restrictions led to a significant fall in demand for petrol 14

1.3 The ACCC proposed to allow oil companies to co-operate during the COVID-19 pandemic 15

1.4 The South Australian Productivity Commission released its report investigating models of fuel price transparency 16

1.5 The South Australian Government subsequently announced the introduction of a fuel price reporting scheme 16

1.6 The Tasmanian Government announced the introduction of a fuel price reporting scheme 17

1.7 The NSW FuelCheck app reached 1 million downloads 17

1.8 Viva Energy brought forward its maintenance program at its Geelong refinery 17

1.9 Chevron completed its acquisition of Puma Energy 18

1.10 Viva Energy agreed to acquire Westside Petroleum 18

1.11 The Australian Government announced measures to boost fuel security and establish a national oil reserve 18

1.12 Alimentation Couche-Tard announced its decision to conclude acquisition talks with Caltex 19

1.13 United Petroleum planned to increase its terminal and storage capacity 19

1.14 Caltex officially changed its name to Ampol 19

2. ACCC activities 202.1 ACCC and the petrol industry 20

2.2 Activities during the June quarter 2020 20

3. Retail petrol price movements in the capital cities 243.1 Retail prices over the year to June 2020 24

3.2 Annual average prices 25

3.3 Retail prices compared with Mogas 95 prices 25

3.4 Gross indicative retail differences 26

3.5 Elements of the price change 31

3.6 Retail prices in Brisbane were higher than the other four largest cities in aggregate 34

3.7 Price cycles in the five largest cities 35

3.8 Prices in the three smaller capital cities 36

3.9 Retail prices of the main petrol grades 37

3.10 Components of petrol prices in 2019-20 38

3.11 Petrol prices in Australia and other OECD countries 39

4. Retail petrol price movements in regional locations 414.1 Influences on regional petrol prices 41

4.2 Regional petrol prices in aggregate 41

4.3 Prices in each of the states and territories 42

iv Report on the Australian petroleum market—June 2020

5. International price movements 475.1 Crude oil and refined petrol 47

5.2 AUD–USD exchange rate 50

6. Diesel and automotive LPG prices 526.1 Diesel price movements 52

6.2 Components of diesel prices in 2019–20 53

6.3 Automotive LPG price movements 53

6.4 Components of automotive LPG prices in 2019–20 54

Appendix A: Petrol price cycles and GIRDs in Sydney, Melbourne and Adelaide in 2019–20 56

Appendix B: Petrol price data for monitored locations 58

Appendix C: Update on regional market studies 63

1 Report on the Australian petroleum market—June 2020

Key messages

Retail petrol prices in the five largest cities were significantly lower in the June quarter In the June quarter 2020, average retail petrol prices across the five largest cities (Sydney, Melbourne, Brisbane, Adelaide and Perth) were 109.0 cents per litre (cpl), a decrease of 28.8 cpl from the March quarter 2020 (137.8 cpl).1

This was the lowest quarterly average price since the June quarter 2005 (105.2 cpl), and the lowest quarterly average price in real (i.e. inflation adjusted) terms since the March quarter 1999 (108.4 cpl).2 The last time prices in real terms decreased by as much as they did in the June quarter 2020 was in the December quarter 2008 during the Global Financial Crisis (when they decreased by 34.8 cpl).

Daily average prices reached their lowest level on record in real terms in April 2020Daily average prices (on a seven-day rolling average basis) decreased significantly in the March quarter 2020 (from a high of 156.3 cpl on 17 January 2020 to 117.7 cpl at the end on March 2020) and they continued to decrease in April 2020.3

On 23 April 2020, seven-day rolling average prices fell below one dollar per litre for the first time since March 2005 and were at their lowest level on 29 April 2020, when they were 92.4 cpl. The last time seven-day rolling average prices were at this level was on 9 January 2005 (92.2 cpl). In real terms, they were the lowest recorded since the ACCC’s predecessor, the Prices Surveillance Authority (PSA), began collecting comprehensive retail prices in all five cities in May 1991.

Prices subsequently increased to 123.8 cpl on 15 June 2020, before ending the month at 119.3 cpl. These price movements are shown in the following chart.

1 In this report, references to petrol are to regular unleaded petrol (RULP) unless otherwise specified. From 1 July 2014, the ACCC has used E10 prices (i.e. RULP with up to 10 per cent ethanol) instead of RULP prices for Sydney in the average price for the five largest cities.

2 All prices in this report are nominal prices unless otherwise specified. Real prices are prices adjusted for inflation using the Consumer Price Index.

3 A seven-day rolling average price is the average of the current day’s price and prices on the six previous days. Traditionally, the ACCC has used a seven-day rolling average to smooth out the influence of petrol price cycles in the larger cities on price movements. This has been less effective in recent years because the duration of price cycles in most of the larger cities has become substantially greater than seven days.

2 Report on the Australian petroleum market—June 2020

Seven-day rolling average retail petrol prices in the five largest cities: 1 July 2019 to 30 June 2020cp

l

80

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170Ju

l–19

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Ap

r–20

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Source: ACCC calculations based on data from FUELtrac.

Note: The area to the right of the dotted vertical line in this and subsequent charts represents the June quarter 2020.

Annual average retail prices in 2019–20 were the lowest in three years in real termsAnnual average retail petrol prices in the five largest cities in 2019–20 were 134.6 cpl, which was 6.6 cpl lower than in 2018–19 (141.2 cpl), as shown in the following chart. In real terms, these were the lowest annual average prices since 2016–17 (when annual average prices were 128.6 cpl).

Annual average retail petrol prices in the five largest cities in nominal and real terms: 2000–01 to 2019–20

cpl

Nominal prices Real prices

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90

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2018

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2019

–20

Source: ACCC calculations based on data from FUELtrac, Informed Sources and Australian Bureau of Statistics, 6401.0 Consumer Price Index, Australia, June 2020, Tables 1 and 2. CPI: All Groups, Index Numbers and Percentage Changes, at: https://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6401.0June%202020?OpenDocument, accessed on 20 August 2020.

Note: Real prices are shown in 2019–20 dollars.

3 Report on the Australian petroleum market—June 2020

International crude oil and refined petrol prices reached their lowest levels in 21 years in the quarterRetail petrol prices in Australia are primarily determined by international refined petrol prices (which in turn are influenced by international crude oil prices) and the AUD–USD exchange rate. The relevant international benchmark for Australia is the price of Singapore Mogas 95 Unleaded (Mogas 95), which is the price of refined petrol in the Asia-Pacific region.

The sharp decreases in retail prices in the June quarter 2020 were driven by the significant decreases in international crude oil and refined petrol prices, which both decreased by more than 40 per cent. Quarterly average Brent crude oil prices were around USD 28 per barrel (a decrease of USD 22 per barrel, or 44 per cent, from the previous quarter). Quarterly average Mogas 95 prices were around USD 33 per barrel (a decrease of USD 24 per barrel, or 42 per cent).

In April 2020, monthly average Brent crude oil prices were USD 14.8 per barrel, the lowest monthly average price since March 1999. Similarly, monthly average Mogas 95 prices in April 2020 were USD 20.5 per barrel, the lowest monthly average price since June 1999.

The fall in crude oil prices began in mid-January 2020, influenced by the news coming out of China about the COVID-19 outbreak, and its impact on Chinese economic activity. As countries imposed restrictions on travel and economic activity, demand for crude oil and refined petrol products decreased significantly. This decrease in demand was compounded by the inability of the Organisation of the Petroleum Exporting Countries (OPEC) cartel and other crude oil producing countries (including Russia) to agree on further crude oil production cuts at their meeting on 5 March 2020, and Saudi Arabia’s subsequent increase in production and announcement of discounts in key markets.

The inability of the OPEC cartel to agree on production cuts resulted in positive outcomes for motorists, as there was an immediate drop of more than 30 per cent in crude oil prices.

In Australian cents per litre, quarterly average Mogas 95 prices were 31.3 cpl in the June quarter 2020, a decrease of 22.3 cpl from the previous quarter.

4 Report on the Australian petroleum market—June 2020

Movements in average petrol prices in 2019–20 broadly reflected changes in international refined petrol benchmark pricesRetail petrol prices in the five largest cities and Mogas 95 prices in Australian cents per litre moved in a broadly similar pattern during the quarter, and over 2019–20 (as shown in the following chart).

Monthly average retail petrol prices in the five largest cities and Mogas 95 prices: July 2019 to June 2020

cpl

cpl

Five largest cities (LHS) Mogas 95 (RHS)

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Source: ACCC calculations based on data from FUELtrac, Argus Media, OPIS and the Reserve Bank of Australia (RBA).

In April 2020, monthly average Mogas 95 prices in Australian cents per litre decreased to 20.5 cpl, their lowest level since June 1999, before increasing to 41.2 cpl in June 2020. In real terms, monthly average Mogas 95 prices in April 2020 were the lowest since the PSA began collecting comprehensive Mogas 95 data in June 1993.

Monthly average retail petrol prices across the five largest cities in April 2020 were 102.6 cpl, the lowest monthly average since February 2005 (97.8 cpl), and the lowest monthly average in real terms since the PSA began collecting comprehensive retail prices in all five cities in May 1991. Retail prices increased in the two subsequent months and were 15.8 cpl higher in June 2020 (118.4 cpl).

5 Report on the Australian petroleum market—June 2020

COVID-19 restrictions led to significant reductions in petrol sales in the quarter The COVID-19 restrictions on travel and economic activity in Australia from mid-March 2020 meant that there were fewer motorists purchasing fuel from retail sites. As a result, the volume of petrol sales decreased significantly in the June quarter 2020, as shown in the following chart.

Monthly sales volumes of regular unleaded petrol in Australia: July 2019 to June 2020

300

400

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g–1

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alit

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Source: Department of Industry, Science, Energy and Resources (DISER), Australian Petroleum Statistics, issue 287, June 2020 at: https://www.energy.gov.au/publications/australian-petroleum-statistics-2020, accessed on 20 August 2020.

Petrol sales volumes across Australia decreased substantially in April 2020, and were 43 per cent lower than monthly average sales in calendar year 2019. The decrease was not uniform across the states and territories—it ranged from a 50 per cent decrease in Victoria to a 25 per cent decrease in the Northern Territory. Petrol sales volumes rebounded moderately in May and June 2020.

In the June quarter 2020, monthly average petrol sales volumes were 28 per cent lower than monthly average sales volumes in calendar year 2019.4 The decrease in the quarter ranged from a 35 per cent decrease in Victoria to a 10 per cent decrease in the Northern Territory. The significant decrease in petrol sales in the quarter was consistent with information provided by industry in recent months.

Falls in demand due to COVID-19 restrictions contributed to longer lags between changes in international refined petrol prices and changes in retail pricesThere are generally lags of one to two weeks between changes in Mogas 95 prices and changes in retail prices in the larger capital cities.

These lags occur at both the wholesale and retail level. At the wholesale level, these occur because the wholesale pricing formulas of the major wholesalers incorporate rolling average Mogas 95 prices, and not all wholesalers change their wholesale prices on a daily basis. At the retail level, it can take time for a change in wholesale prices to be reflected in retail prices. This may be influenced by the timing of deliveries of petrol to retail sites as well as the state of the price cycle and the degree of competition. These lags are longer in the smaller capital cities and regional locations where volume turnover is smaller and the degree of competition is often not as intense.

4 Average petrol sales volumes in the June quarter 2020 were 27 per cent lower than in the June quarter 2019.

6 Report on the Australian petroleum market—June 2020

This substantial reduction in demand arising from the COVID-19 restrictions would have further slowed the turnover time in many locations, increasing the lag between changes in Mogas 95 prices and changes in retail petrol prices.

The ACCC continued its enhanced fuel price monitoring in the quarterOn 9 March 2020, in the context of the substantial decrease in crude oil prices in early March, the Treasurer discussed with the ACCC the importance of fuel retailers being held to account and Australians getting the benefit from the lower international oil prices.5

In response, the ACCC increased its fuel price monitoring activities in the March and June quarters 2020. The Chair of the ACCC undertook numerous media interviews relating to petrol issues and identified a number of locations—including Mackay, Townsville, Rockhampton, Cooma, South West Western Australia and Tasmania—where petrol prices were slow to fall.

ACCC monitoring of weekly average petrol prices in 168 regional locations between January and June 2020 indicated that retail petrol prices decreased by at least 40.0 cpl in almost 50 per cent of regional locations, and by at least 25.0 cpl in all but six regional locations.6 As prices remained high in some regional locations—including Cloncurry and Mount Isa where prices decreased by less than 17.0 cpl—not all motorists in regional locations received the benefits of reduced international crude oil prices.7

Gross indicative retail differences remained high in the quarterIn the June quarter 2020, average gross indicative retail differences (GIRDs) in the five largest cities were 15.9 cpl, a decrease of 0.3 cpl from the previous quarter.

GIRDs are a broad indicator of gross retail margins. They are calculated by subtracting average wholesale prices (as indicated by published terminal gate prices (TGPs)) from average retail petrol prices. TGPs are the prices at which petrol can be purchased from wholesalers in the spot market and are posted on a regular basis on the websites of the major wholesalers. Although few wholesale transactions occur at TGPs, they can be regarded as indicative wholesale prices. TGPs vary across brands and cities. TGPs reflect the wholesale price of petrol only, and exclude other retail operating costs (such as freight, branding, rent, labour and utility costs). As GIRDs include these costs, they should not be confused with actual retail profits.

GIRDs reported by the ACCC are averages across the five largest cities over time. The level of prices, costs and profits vary significantly between retail operations and not all retail petrol sites will be achieving these gross margins. Some will be achieving higher gross margins, others lower. The ACCC’s petrol market studies found that profits per retail petrol site could vary considerably between retailers, with some retail sites making substantial profits and others making very little.

5 The Hon Josh Frydenberg MP, Treasurer, Doorstop interview, Parliament House, Canberra, Transcript, 9 March 2020, at: https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/transcripts/doorstop-interview-parliament-house-canberra-19, accessed on 20 August 2020.

6 To put these decreases in retail prices in perspective, average weekly wholesale prices (as indicated by published terminal gate prices) across the five largest cities decreased by 53.7 cpl between the week ending 3 January 2020 and the week ending 24 April 2020. Regional wholesale prices would have decreased by similar amounts.

7 Past ACCC analysis has indicated that there are distinct differences in the extent to which retail petrol prices in regional locations follow movements in Mogas 95 prices. In some, retail petrol prices closely follow them, whereas in others retail petrol prices have only a minimal relationship with movements in Mogas 95 prices. Furthermore, regional locations have different lags between changes in Mogas 95 prices and changes in retail prices. The impact of the COVID-19 restrictions on demand are also likely to be different in different regional locations.

7 Report on the Australian petroleum market—June 2020

Annual average GIRDs increased in 2019–20 to their highest on record in both nominal and real terms Annual average GIRDs across the five largest cities in 2019–20 were 14.7 cpl, which was 2.7 cpl higher than average GIRDs in 2018–19 (12.0 cpl). This was the highest annual average GIRDs in both nominal and real terms since the ACCC began calculating them in 2002.

In real terms, annual average GIRDs in the five largest cities increased in 2019–20 by 2.5 cpl to the highest annual average GIRD on record. This is shown in the following chart.

Annual average GIRDs in the five largest cities in real terms: 2002–03 to 2019–20

cpl

Real GIRDs Long-term average (real terms)

Period avg: 8.9 cpl

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Source: ACCC calculations based on data from FUELtrac, Informed Sources, BP, Caltex, Mobil, Viva Energy and WA FuelWatch, and Australian Bureau of Statistics, 6401.0 Consumer Price Index, Australia, June 2020, Tables 1 and 2. CPI: All Groups, Index Numbers and Percentage Changes, at: https://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6401.0 June%202020?OpenDocument, accessed on 20 August 2020.

Note: Real prices are shown in 2019–20 dollars.

The ACCC recently analysed financial data provided by petrol companies on retail gross profits (i.e. retail operating costs and net profits) from 2005–06 to 2017–18 to further understand the reasons for the higher GIRDs over time.8 The analysis found that both retail operating costs and net profits on RULP increased during the period, and particularly between 2013–14 and 2016–17, suggesting that higher GIRDs had been influenced by increases in both operating costs and profits. The analysis compared GIRDs (which are based on price data) with retail gross profit financial results on RULP (which are based on financial data). Both measures, although not directly comparable, showed a broadly similar upward trend over the longer term.

Higher GIRDs in 2019–20 are likely to have been influenced by the large decreases in TGPs and COVID-19 restrictionsThere are a couple of inter-related factors that may have contributed to the higher average GIRDs in the March and June quarters 2020 and in financial year 2019–20.

8 ACCC, Financial performance of the Australian downstream petroleum industry 2002 to 2018, 22 April 2020, pp. 34–36, at: https://www.accc.gov.au/publications/petrol-industry-reports/financial-performance-of-the-australian-downstream-petroleum-industry-2002-to-2018.

8 Report on the Australian petroleum market—June 2020

Historically GIRDs tend to increase when TGPs decrease sharplyPast ACCC analysis has found that GIRDs are influenced by large changes in TGPs over a short period of time. When TGPs increase by large amounts in a short period, lags between changes in TGPs and changes in retail prices often have the effect of reducing GIRDs in the short term. Conversely, when TGPs decrease by large amounts in a short period—which occurred in the March and June quarters 2020—these lags often have the effect of increasing GIRDs.

The lags in the March and June quarters 2020 are likely to have been exacerbated by the substantial reduction in demand arising from the COVID-19 restrictions, which will have further increased the fuel turnover time in many locations.

Some retailers may not have been passing on the full decrease in TGPs to retail pricesPetrol retailing is a high-volume low-margin business with many fixed costs (such as rent and branding). This means that when sales volumes decline, as they did in the June quarter 2020 due to the implementation of COVID-19 restrictions, the cost per unit of petrol will increase. As a result, in order to keep revenue to partially cover their fixed costs in this period, some retailers may not have been passing on the full decreases in TGPs to retail prices. This was suggested by comments made in the June quarter 2020 by the Australasian Convenience and Petroleum Marketers Association and Viva Energy.9

The influence of these factors is reflected in the change in the shape of the petrol price cycles in the five largest cities since March 2020 (when TGPs decreased sharply). In Sydney, Melbourne, Brisbane and Adelaide, the price cycles became longer in duration and did not get as close to TGPs as they had previously at the trough price. In Perth, while regular weekly price cycles continued, they also did not get as close to TGPs as they had previously at the trough price.

Taxes were the largest component of the price of petrol in the quarter There are three broad components of the retail price of petrol: the international price of refined petrol, taxes (excise and GST) and other costs and margins at the wholesale and retail levels.

The following chart shows the change in these components across the five largest cities between the March quarter 2020 and the June quarter 2020. The chart separates the other costs and margins component into two elements: other wholesale costs and margins (which includes international shipping costs and other import costs, and wholesale costs and margins), and retail costs and margins (represented by GIRDs).

9 These comments are provided in chapter 3.

9 Report on the Australian petroleum market—June 2020

Changes in the components of average retail petrol prices in the five largest cities: March quarter 2020 to June quarter 2020

53.6

Mar-20 Mogas 95 Exchange rate Other wholesalecosts and margins

Taxes GIRDs Jun-20

cpl

Mogas 95 Other wholesale costs and margins Taxes GIRDs

137.8 cpl -22.4 cpl

+0.1 cpl

-22.3 cpl

-3.8 cpl -2.4 cpl-0.3 cpl 109.0 cpl

-28.8 cpl

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14.8

11.0

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16.2

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Source: ACCC calculations based on data from FUELtrac, Argus Media, BP, Caltex, Mobil, Viva Energy, RBA and the Australian Taxation Office (ATO).

Notes: All prices are in Australian cents per litre.

The taxes component includes fuel excise and wholesale GST. The small amount of retail GST is included in GIRDs rather than in taxes, to be consistent with GIRDs reported elsewhere in this report.

The decrease in the average retail price in the five largest cities by 28.8 cpl in the June quarter 2020 was driven predominantly by a decrease in the price of Mogas 95 (22.3 cpl).

The AUD–USD exchange rate can be a significant determinant of Australia’s retail petrol prices because international refined petrol is bought and sold in US dollars in global markets. Excluding the small effect of a change in the AUD–USD exchange rate (which decreased by around US 0.1 cent in the quarter), Mogas 95 prices would have decreased by 22.4 cpl in the quarter. Lower retail prices were also influenced by decreases in other wholesale costs and margins (3.8 cpl), taxes (2.4 cpl) and GIRDs (0.3 cpl). Taxes decreased during the June quarter 2020 due to less GST generated from the lower wholesale prices.

As a result of the significantly lower international refined petrol prices, this was the first quarter since the September quarter 2016 that taxes accounted for a larger proportion of total petrol costs than Mogas 95 prices.

The two largest components of the average retail price—Mogas 95 and taxes—accounted for around 77 per cent of the average price of petrol in the June quarter 2020.10

South Australia and Tasmania announced the introduction of fuel price transparency schemesIn the June quarter 2020, two jurisdictions—South Australia and Tasmania—announced the introduction of fuel price transparency schemes.

Fuel price transparency schemes are currently in place in Western Australia (FuelWatch, since 2001), New South Wales (FuelCheck, since 2016), the Northern Territory (MyFuel NT, since 2017) and Queensland (a two-year trial that began at the end of 2018). The Australian Capital Territory

10 In this calculation, taxes includes fuel excise, and both wholesale and retail GST.

10 Report on the Australian petroleum market—June 2020

Government announced in February 2020 that it was examining whether the ACT could be included in the New South Wales FuelCheck scheme.11

On 19 June 2020, the New South Wales Government announced that the FuelCheck app had been downloaded 1 million times since its launch in 2017. It also noted that the NRMA had said that using the app regularly in a standard vehicle could save a motorist $500 a year.

The ACCC has long been a supporter of fuel price transparency schemes in Australia. Real-time price information can help consumers find the lowest prices, encourages them to buy where petrol is cheapest, and rewards price-competitive retailers. For these benefits to be achieved it is essential that such schemes are comprehensive, accurate, timely and readily accessible to consumers.

Retail prices in Brisbane were higher than the other four largest cities in aggregateRetail prices in Brisbane are generally the highest among the five largest cities. In the June quarter 2020, average retail prices in Brisbane (110.6 cpl) were again the highest, and were 4.3 cpl higher than the lowest average retail prices for the quarter, observed in Perth (106.3 cpl). In the June quarter 2020, average retail prices in Brisbane were 2.0 cpl higher than the other four largest cities in aggregate (108.6 cpl). This was 1.7 cpl lower than the differential in the March quarter 2020 (3.7 cpl).

In 2019–20, Brisbane retail prices were on average 2.8 cpl higher than the average across the other four largest cities. This was 0.5 cpl higher than the differential in 2018–19 (2.3. cpl).

The city–country petrol price differential increased in the quarter but decreased in 2019–20The ACCC monitors fuel prices in all capital cities and over 190 regional locations across Australia.

In the June quarter 2020, average prices in regional locations in aggregate (regional prices) were 116.5 cpl. This was 7.5 cpl higher than average prices in the five largest cities (109.0 cpl). In the March quarter 2020, average regional prices were 6.7 cpl higher than average prices in the five largest cities.

In 2019–20, the annual average differential between regional prices and prices in the five largest cities was 4.0 cpl, which was 2.5 cpl lower than in 2018–19 (6.5 cpl).

ACCC regional market study locationsThe ACCC undertook four regional petrol market studies between 2015 and 2017. These studies examined petrol markets in Darwin, Launceston, Armidale and Cairns. Following the completion of those studies, the ACCC continues to monitor prices and developments in those locations to assess changes in competition over time.

The following table shows average retail petrol prices and GIRDs for each location, and a comparison with those in the five largest cities, in the June quarter 2020 and in 2019–20.

11 In early 2018, an inquiry by the Victorian Parliament into fuel prices in regional Victoria considered, but did not support, the introduction of a fuel price transparency scheme in Victoria. See: https://www.parliament.vic.gov.au/58th-parliament/eejsc/inquiries/article/3149.

11 Report on the Australian petroleum market—June 2020

Quarterly and annual average retail petrol prices and GIRDs in Darwin, Launceston, Armidale, Cairns and the five largest cities—June quarter 2020 and 2019–20—cpl

Darwin Launceston Armidale Cairns Five largest cities

June quarter 2020

Retail prices

Ave price: June quarter 2020 116.0 125.4 115.5 116.2 109.0

Change from March quarter 2020 -20.1 -30.4 -29.0 -27.9 -28.8

Difference from five largest cities: June quarter 2020

7.0 16.4 6.5 7.2 -

Change from March quarter 2020 8.7 -1.6 -0.2 0.9 -

GIRDs

Ave GIRDs: June quarter 2020 19.4 26.7 20.9 19.7 15.9

Change from March quarter 2020 9.2 -2.4 -2.3 1.2 -0.3

Difference from five largest cities: June quarter 2020

3.5 10.8 5.0 3.8 -

Change from March quarter 2020 9.5 -2.1 -2.0 1.5 -

2019–20

Retail prices

Ave price: 2019–20 133.8 148.6 137.5 136.7 134.6

Change from 2018–19 -11.6 -7.6 -10.0 -11.4 -6.6

Difference from five largest cities: 2019–20 -0.8 14.0 2.9 2.1 -

Change from 2018–19 -5.0 -1.0 -3.4 -4.8 -

GIRDs

Ave GIRDs: 2019–20 9.8 23.2 17.7 12.9 14.7

Change from 2018–19 -1.8 1.8 -1.7 -2.2 2.7

Difference from five largest cities: 2019–20 -4.9 8.5 3.0 -1.8 -

Change from 2018–19 -4.5 -0.9 -4.4 -4.9 -

Source: ACCC calculations based on data fron FUELtrac, BP, Caltex, Mobil, Viva Energy and WA FuelWatch.

Notes: All prices are for RULP except Armidale (which is E10).

Hobart TGPs are used as a proxy for TGPs in Launceston.

Sydney and Brisbane E10 TGPs are used as a proxy for Armidale TGPs.

The ACCC compares actual retail prices in these locations with estimated retail prices calculated on a long-term competitive cost basis. This calculation reflects the fact that costs (such as freight and operating costs on a per litre basis) are higher in these locations, and assumes that retail margins in these locations should be broadly similar to long-term average retail margins in the five largest cities.

This long-term competitive cost-based price provides a benchmark against which to compare current price levels. It is not static and will change as its underlying elements change over time. If retail prices are constantly above this benchmark price for a sustained period, this may be indicative of a less-competitive market in which retailers are earning higher margins at the expense of consumers.

12 Report on the Australian petroleum market—June 2020

Darwin petrol prices remained below a long-term competitive cost-based priceThe average price in Darwin in the June quarter 2020 was 116.0 cpl, which was 7.0 cpl higher than prices in the five largest cities. In the June quarter 2020, average petrol prices in Darwin remained below a long-term competitive cost-based price.

In 2019–20, the annual average retail price in Darwin was 133.8 cpl, a decrease of 11.6 cpl from 2018–19 (145.4 cpl), and 0.8 cpl lower than prices in the five largest cities.

Motorists can use the MyFuel NT website and app to identify the highest and lowest priced retail sites in Darwin. For example, on 14 August 2020, it showed that there was a range of 3.4 cpl between the highest priced retail site in Darwin (118.9 cpl at a Coles Express site) and the lowest (115.5 at a BP site).

Launceston petrol prices remained substantially above a long-term competitive cost-based priceThe average petrol price in Launceston in the June quarter 2020 was 125.4 cpl, which was 16.4 cpl higher than prices in the five largest cities. The differential between average petrol prices in Launceston and a long-term competitive cost-based price increased in the June quarter 2020.

In 2019–20, the annual average retail petrol price in Launceston was 148.6 cpl, a decrease of 7.6 cpl from 2018–19 (156.2 cpl), and 14.0 cpl higher than prices in the five largest cities.

Motorists in Launceston can use available fuel price websites and apps, such as MotorMouth, to identify the highest and lowest priced retail sites. For example, on 14 August 2020, using the MotorMouth app, there was a 7.5 cpl range between the highest priced retail site in Launceston (126.9 cpl at Ampol and Caltex sites) and the lowest (119.4 cpl at a Caltex site).

Armidale petrol prices were above a long-term competitive cost-based price The average petrol price in Armidale in the June quarter 2020 was 115.5 cpl, which was 6.5 cpl higher than prices in the five largest cities. Petrol prices in Armidale were above a long-term competitive cost-based price in the June quarter 2020.

In 2019–20, the annual average retail petrol price in Armidale was 137.5 cpl, a decrease of 10.0 cpl from 2018–19 (147.5 cpl), and 2.9 cpl higher than prices in the five largest cities.

Motorists in Armidale can use the FuelCheck website and app to identify the highest and lowest priced retail sites. For example, on 17 August 2020, the FuelCheck website showed that there was a 2.9 cpl range between the highest priced RULP retail site in Armidale (119.9 cpl at Caltex Armidale) and the lowest (117.0 cpl at Beardy Street Servo). There was a 1.0 cpl range between the highest priced E10 retail site (118.9 cpl at two Caltex sites) and the lowest (117.9 cpl at Lowes, Coles Express, Woolworths and Caltex sites).

13 Report on the Australian petroleum market—June 2020

Cairns petrol prices were marginally above a long-term competitive cost-based priceThe average petrol price in Cairns in the June quarter 2020 was 116.2 cpl, which was 7.2 cpl higher than the five largest cities. Petrol prices in Cairns were marginally above a long-term competitive cost-based price in the June quarter 2020.

In 2019–20, the annual average retail price in Cairns was 136.7 cpl, a decrease of 11.4 cpl from 2018–19 (148.1 cpl), and 2.1 cpl higher than prices in prices in the five largest cities.

Motorists in Cairns are able to access site-specific petrol price data made available by websites and app providers under the Queensland fuel price reporting trial to identify the highest and lowest priced retail sites. For example, on 11 August 2020, using the Petrol Spy website, there was a 9.6 cpl range between the highest priced retail site in Cairns (123.9 cpl at a BP site) and the lowest (114.3 cpl at United, Liberty, Woolworths, Puma and Caltex sites).

Diesel and automotive LPG prices decreased both in the quarter and in 2019–20In the June quarter 2020, diesel and automotive liquefied petroleum gas (LPG) prices in the five largest cities both decreased:

� average retail diesel prices were 122.1 cpl in the June quarter 2020, a decrease of 24.7 cpl from the March quarter 2020 (146.8 cpl)

� average retail automotive LPG prices in the June quarter 2020 were 78.6 cpl, a decrease of 7.1 cpl from the March 2020 quarter (85.7 cpl).

In 2019–20:

� the annual average retail price of diesel in the five largest cities was 141.8 cpl, a decrease of 10.0 cpl from 2018–19 (151.8 cpl)

� the annual average retail price of automotive LPG in the five largest cities was 80.7 cpl, a decrease of 3.7 cpl from 2018–19 (84.4 cpl).

14 Report on the Australian petroleum market—June 2020

1. Developments in the petroleum industry

1.1 The international prices of crude oil and refined petrol decreased significantly in the June quarter to 21 year lows

In the June quarter 2020, there were significant decreases in the international price of crude oil and refined petrol. Quarterly average Brent crude oil prices were around USD 28 per barrel (a decrease of USD 22 per barrel, or 44 per cent, from the previous quarter). Quarterly average Mogas 95 prices were around USD 33 per barrel (a decrease of USD 24 per barrel, or 42 per cent, from the previous quarter).

In April 2020, monthly average Brent crude oil prices were USD 14.8 per barrel, the lowest monthly average price since March 1999. Similarly, in April 2020, monthly average Mogas 95 prices were USD 20.5 per barrel, the lowest monthly average price since June 1999.

The fall in crude oil prices began in mid-January 2020, influenced by the news coming out of China about the COVID-19 outbreak, and its impact on Chinese economic activity. As countries imposed restrictions on travel and economic activity, demand for crude oil and refined petrol products decreased significantly. This decrease in demand was compounded by the inability of the OPEC cartel and other crude oil producing countries (including Russia) to agree on further crude oil production cuts at their meeting on 5 March 2020 and Saudi Arabia’s subsequent increase in production and announcement of discounts in key markets.

1.2 COVID-19 restrictions led to a significant fall in demand for petrol

The COVID-19 restrictions on travel and economic activity in Australia from mid-March 2020 meant that there were fewer motorists purchasing fuel from retail sites. As a result, the volume of petrol sales decreased significantly in the June quarter 2020, as shown in chart 1.1.

Chart 1.1: Monthly sales volumes of regular unleaded petrol in Australia: July 2019 to June 2020

300

400

500

600

700

800

900

1000

Jul–

19

Au

g–1

9

Sep

–19

Oct

–19

No

v–19

Dec

–19

Jan

–20

Feb

–20

Mar

–20

Ap

r–20

May

–20

Jun

–20

Meg

alit

res

Source: DISER, Australian Petroleum Statistics, issue 287, June 2020 at: https://www.energy.gov.au/publications/australian-petroleum-statistics-2020, accessed on 20 August 2020.

15 Report on the Australian petroleum market—June 2020

Petrol sales volumes across Australia decreased substantially in April 2020, and were 43 per cent lower than monthly average sales in calendar year 2019. The decrease was not uniform across the states and territories—it ranged from a 50 per cent decrease in Victoria to a 25 per cent decrease in the Northern Territory. Petrol sales volumes rebounded moderately in May and June 2020.

In the June quarter 2020, average monthly petrol sales volumes were 28 per cent lower than monthly average sales volumes in calendar year 2019. The decrease in the quarter ranged from a 35 per cent decrease in Victoria to a 10 per cent decrease in the Northern Territory.

The significant decrease in petrol sales in the June quarter 2020 was consistent with information provided by industry in recent months. For example:

� in early April 2020, Caltex noted that it had observed nationwide retail petrol demand reduction in the range of 30 to 50 per cent relative to 2019 volumes12

� in early May 2020, the Australasian Convenience and Petroleum Marketers Association noted that the Australian petroleum industry experienced an average 50 per cent fall in petrol sales and a 30 per cent fall in diesel sales arising from the COVID-19 restrictions13

� in July 2020, Viva Energy stated that fuel sales in its retail Alliance business declined by between 30 per cent and 40 per cent at the height of the crisis in April 2020.14

1.3 The ACCC proposed to allow oil companies to co-operate during the COVID-19 pandemic

On 23 July 2020, the ACCC issued a draft determination proposing to allow the Australian Institute of Petroleum (AIP), its current members and any parties approved by the ACCC, to co-operate, for six months, in order to protect the security of fuel supply during the COVID-19 pandemic.15 AIP’s current members are BP Australia, Caltex Australia, Mobil Oil Australia and Viva Energy Australia. To manage the risks associated with large and unpredictable changes in demand and supply, the proposed authorisation would allow refineries and AIP, the industry’s peak body, to make co-ordinated arrangements designed to secure fuel supplies nation wide.

The ACCC proposes to limit permitted co-operation to discussions engaged in, and arrangements entered into, at meetings of the AIP Board or a committee convened by the AIP Board, for the sole purpose of responding to the COVID-19 pandemic. The participants will not be allowed to reach any arrangements on prices or to exchange commercially or competitively sensitive information relating to marketing or sales activities. AIP will provide detailed minutes of each meeting to the ACCC.

The COVID-19 pandemic has caused an unprecedented disruption to the demand for fuel products in Australia and there is a potential for disruptions to the international supply chains for fuel imported into Australia. Allowing fuel companies to coordinate the scheduling of importation, storage and delivery in these exceptional times will provide the fuel sector with more capability to help ensure security of supply of fuel products in Australia, and minimise the risk of shortages. The ACCC considers that the likely public benefit of improved security of fuel supply to Australian businesses and consumers outweighs any likely public detriments that may arise from competitors cooperating and sharing operational information under the proposed authorisation.

The ACCC received the application for authorisation from AIP on 2 April 2020 and granted an urgent interim authorisation to enable the oil companies to commence cooperating while the ACCC is considering the application. The ACCC is aiming to make a final decision in September 2020.

12 Caltex Australia, Lytton Refinery T&I Decision, Trading update and details of business and capital initiatives, ASX release, 6 April 2020, at: https://wcsecure.weblink.com.au/pdf/CTX/02222354.pdf, accessed on 20 August 2020.

13 Australasian Convenience and Petroleum Marketers Association, Covid-19 fuel price criticism is bizarre, Latest industry news, 1 May 2020, at: https://acapmag.com.au/2020/05/covid19-fuel-price-criticism-is-bizarre/, accessed on 20 August 2020.

14 Viva Energy, AGM Addresses and Presentation, ASX announcement, 6 July 2020, at https://investor.vivaenergy.com.au/DownloadFile.axd?file=/Report/ComNews/20200706/02251907.pdf, accessed on 20 August 2020.

15 See: https://www.accc.gov.au/public-registers/authorisations-and-notifications-registers/authorisations-register/australian-institute-of-petroleum.

16 Report on the Australian petroleum market—June 2020

1.4 The South Australian Productivity Commission released its report investigating models of fuel price transparency

On 18 December 2019, the South Australian Government asked the South Australian Productivity Commission (SAPC) to investigate and report on potential models that would increase the transparency of fuel prices in South Australia.16 It was not asked for recommendations. The report was delivered to the South Australian Premier on 18 March 2020 and published on the SAPC website on 13 May 2020.17

The SAPC found that:

� There are two potential models for government intervention to provide full transparency of fuel prices:

– Option 1 is based on the NSW FuelCheck regime, further modified to adopt improvements identified by the Queensland Government when introducing a similar scheme. This scheme provides full, real-time information on fuel prices by location and information about the current price cycle among other things.

– Option 2 is based on the WA FuelWatch regime, which provides full, real-time information of fuel prices that are in force for a standard 24 hour period, with prices being advised to the WA Government during the preceding day.

� Both options would probably yield modest net benefits (benefits to motorists very likely would exceed the regulatory costs imposed on retailers and the government) compared with the status quo. These net benefits are likely to grow over time with the increased use of the information by motorists.

� The choice between option 1 and option 2 may depend on factors including:

– the impact on competition (option 1 is more pro-competition than option 2)

– price certainty for motorists (option 2 locks in prices for 24 hours), and

– the regulatory costs to retailers (option 1 is said by retailers to be more efficient in using industry information).

The SAPC report concluded that there is merit in adopting a model based on option 1, largely because this model is pro-competition compared with option 2.

1.5 The South Australian Government subsequently announced the introduction of a fuel price reporting scheme

On 13 May 2020, the South Australian Attorney General, Vickie Chapman MP, announced that, following the review by the SAPC, South Australia would introduce a fuel price transparency scheme for a trial period of two years.18 The Attorney General noted that, while the scheme may not reduce the overall cost of petrol, it would help motorists make informed choices and find the cheapest prices at any given time. The scheme is along the line of option 1 in the SAPC report. Under the trial, petrol stations will be required to report any price changes to a centralised database.

On 23 July 2020, the South Australian Government announced that the legislation that would mandate South Australian petrol stations to disclose their prices to a central database within half an hour of them

16 Hon Steven Marshall MP, Premier of SA, Letter to Dr Matthew Butlin, Chair and Chief Executive, SA Productivity Commission, 18 December 2019, at: https://www.sapc.sa.gov.au/__data/assets/pdf_file/0005/133628/Fuel-Pricing-Letter-from-the-Premier-of-South-Australia.pdf, accessed on 20 August 2020.

17 South Australian Productivity Commission, Commissioned Report on Fuel Pricing, 18 March 2020, at: https://www.sapc.sa.gov.au/commissioned-reports/commissioned-reports/commissioned-report-into-fuel-pricing/Notice-of-Commissioned-report, accessed on 20 August 2020.

18 Premier of South Australia, Steven Marshall, Helping motorists find the best deal at the bowser, media release, 13 May 2020, at: https://www.premier.sa.gov.au/news/media-releases/news/helping-motorists-find-the-best-deal-at-the-bowser, accessed on 20 August 2020.

17 Report on the Australian petroleum market—June 2020

changing had been passed in the State Parliament.19 The Government will go out to tender to find a data aggregator. The data will be made available for free to private app developers, as is the case in Queensland.

1.6 The Tasmanian Government announced the introduction of a fuel price reporting scheme

On 26 May 2020, the Tasmanian Attorney General and Minster for Building and Construction, Elise Archer MP, announced the Tasmanian Government would introduce a mandatory real-time fuel price reporting scheme.20

As part of the scheme, all fuel retailers will be required to update fuel prices when they change. To provide consumers with access to this information, a website and a free app are being developed which will allow motorists to search for fuel by location, price, type or brand. The provision of price information by retailers will be closely monitored by the Tasmanian Government, with penalties for retailers who fail to provide accurate information.

The scheme will be established through a Code of Practice under the Australian Consumer Law (Tasmania) Act 2010, which will be subject to a consultation process with stakeholders, including the RACT and fuel retailers. The scheme is expected to become operational following consultation and the development of the free app for motorists.

1.7 The NSW FuelCheck app reached 1 million downloads

On 19 June 2020, the NSW Minister for Customer Service, Victor Dominello MP, announced that the NSW Government’s free FuelCheck app had been downloaded 1 million times since its launch in 2017.21 He said that the app empowered motorists to make more informed decisions about where to fill up, by providing them with real-time petrol information for all fuel types and service stations across NSW. He noted that the NRMA had said that using the app regularly in a standard vehicle could save a motorist $500 a year.

1.8 Viva Energy brought forward its maintenance program at its Geelong refinery

On 16 June 2020, Viva Energy announced that it was proceeding with the major maintenance of the residue catalytic cracking unit at its Geelong refinery, under a revised structure in response to the impacts of COVID-19.22

Viva Energy stated that the project had been restructured to commence earlier than planned and over a longer period of time. Viva Energy noted that the refining environment remains very challenging, with a number of processing units already shutdown due to significant reductions in local demand for jet fuel and petrol, and very weak global refining margins impacting profitability.

19 Vicki Chapman MP, South Australians one-step closer to real time fuel prices, 23 July 2020, at: https://www.premier.sa.gov.au/news/media-releases/news/south-australians-one-step-closer-to-real-time-fuel-prices, accessed on 20 August 2020.

20 Premier of Tasmania, Peter Gutwein, Putting downward pressure on Tasmanian fuel prices, media release, 26 May 2020, at: http://www.premier.tas.gov.au/releases/putting_downward_pressure_on_tasmanian_fuel_prices, accessed on 20 August 2020.

21 NSW Minister for Customer Service, Victor Dominello MP, Fuelcheck app goes wowsers at the bowsers, media release, 19 June 2020, at: https://www.nsw.gov.au/media-releases/fuelcheck-app-goes-wowsers-at-bowsers, accessed on 20 August 2020.

22 Viva Energy, Supporting Victoria’s evolving energy needs, media release, 16 June 2020, at: https://www.vivaenergy.com.au/about-us/media-centre/news/2020/supporting-victorias-evolving-energy-needs, accessed on 20 August 2020.

18 Report on the Australian petroleum market—June 2020

1.9 Chevron completed its acquisition of Puma EnergyOn 30 June 2020, Chevron and Puma Energy both announced the completion of the acquisition of Puma Energy (Australia) Holdings Pty Ltd by Chevron.23 The acquisition, which was initially reported on 19 December 2019, was completed following the receipt of all necessary regulatory approvals. It saw Chevron acquire all shares and equity interests of Puma Energy (Australia) Holdings Pty Ltd for $425 million.

The acquisition saw Chevron add more than 360 company-owned and retailer-owned service stations, a commercial and industrial fuels business, owned or leased seaboard import terminals and fuel distribution depots to its Australian portfolio. The Puma Energy brand will continue under Chevron’s new ownership in Australia for the near-term.

1.10 Viva Energy agreed to acquire Westside PetroleumOn 5 May 2020, Viva Energy announced that it had agreed to acquire the remaining 50 per cent of the shares of Westside Petroleum.24 The announcement followed a previous agreement in August 2018 by Viva Energy to acquire an initial 50 per cent non-controlling interest in Westside Petroleum, with an option to acquire the remaining 50 per cent at a future time. Viva Energy stated that the proposed acquisition is subject to FIRB and ACCC regulatory approvals.

1.11 The Australian Government announced measures to boost fuel security and establish a national oil reserve

On 22 April 2020, the Australian Government announced it was boosting the nation’s long-term fuel security by taking advantage of dramatic falls in global oil prices and building on the agreement with the US to access their Strategic Petroleum Reserve (SPR).25

Under the new measures, Australia will establish its first Government-owned oil reserves for domestic fuel security. This will include a deal with the US to store Australian Government owned crude oil in the SPR. Australia will spend $94 million to buy oil at the current low global prices. Australia has access to hold oil in the SPR for an initial period of 10 years.

The Minister for Energy and Emissions Reduction, the Hon Angus Taylor MP, said the Government would also work with the private sector to consider options for improving domestic fuel security, and would work with refineries on temporary measures to ease the stockpiles of jet fuel by amending fuel standards under the Fuel Quality Standards Act.

On 15 June 2020, the Australian Government sought submissions from stakeholders in the oil industry through a request for information (RFI) to help the Government in forming the next stage of the fuel security program and to identify opportunities to increase Australia’s domestic fuel storage capacity. Submissions to the RFI closed on 10 July 2020.26 The Australian Government also commenced a

23 Chevron, Chevron Completes Acquisition of Puma Energy (Australia) Holdings Pty Ltd, media release, 30 June 2020, at: https://www.chevron.com/stories/chevron-completes-acquisition-of-puma-energy-australia-holdings-pty-ltd, accessed on 20 August 2020; and Puma Energy, Puma Energy Successfully Completes Sale of Australia Fuels Business to Chevron, press release, 30 June 2020, at: https://www.pumaenergy.com/press-releases/2020/06/30/puma-energy-successfully-completes-sale-of-australia-fuels-business-to-chevron/, accessed on 20 August 2020.

24 Viva Energy, Viva Energy Acquires Westside Petroleum, news, 5 May 2020, at: https://www.vivaenergy.com.au/about-us/media-centre/news/2020/viva-energy-acquires-westside-petroleum, accessed on 20 August 2020.

25 Minister for Energy and Emissions Reduction, the Hon Angus Taylor MP, Australia to boost fuel security and establish national oil reserve, media release, 22 April 2020, at: https://www.minister.industry.gov.au/ministers/taylor/media-releases/australia-boost-fuel-security-and-establish-national-oil-reserve, accessed on 20 August 2020.

26 Department of Industry, Science, Energy and Resources, Help increase Australia’s domestic fuel storage: request for information, news, 15 June 2020, at: https://www.industry.gov.au/news-media/help-increase-australias-domestic-fuel-storage-request-for-information, accessed on 20 August 2020; and Minster for Energy and Emissions Reduction, the Hon Angus Taylor MP, Enhancing Australia’s fuel security, media release, 15 June 2020, at: https://www.minister.industry.gov.au/ministers/taylor/media-releases/enhancing-australias-fuel-security, accessed on 20 August 2020.

19 Report on the Australian petroleum market—June 2020

long-term strategic study of the refining industry. This work will assess the state of the industry and any required actions, with the objective of maintaining the long-term fuel security of Australia.

1.12 Alimentation Couche-Tard announced its decision to conclude acquisition talks with Caltex

On 20 April 2020, Caltex announced that discussions between Caltex and Alimentation Couche Tard (ACT) in relation to the conditional, non-binding and indicative acquisition proposal for Caltex had concluded.27

The conclusion of discussions followed the end of the agreed due diligence period and ACT’s subsequent decision not to proceed with its proposal due to the high level of economic uncertainty caused by the COVID-19 pandemic. ACT communicated an intention to seek to re-engage with Caltex once there is sufficient clarity as to the global outlook, although there is no certainty that ACT will ultimately do so.

1.13 United Petroleum planned to increase its terminal and storage capacity

On 25 May 2020, The Australian reported that United Petroleum was embarking on a major expansion to boost storage capacity.28 United Petroleum was reported to have received development approval for a new fuel import terminal at the Port of Brisbane with up to 200 million litres of storage while boosting capacity by a third at Victoria’s Hastings terminal.

The article stated that United Petroleum planned to deliver 120 million litres of storage at the Brisbane fuel terminal with a second phase adding an extra 80 million litres, while the Hastings terminal would lift capacity from 140 million litres to 190 million litres.

1.14 Caltex officially changed its name to AmpolOn 15 May 2020, Caltex announced that its name would officially change to Ampol Limited on 19 May 2020.29 The first Ampol sites will appear in Sydney and Melbourne in the second half of 2020, with roll out nationally in 2021. The transition from Caltex to Ampol is expected to be completed by the end of 2022.30

27 Caltex Australia, Conclusion of acquisition discussions with Alimentation Couche-Tard, ASX release, 20 April 2020, at: https://wcsecure.weblink.com.au/pdf/CTX/02226209.pdf, accessed on 20 August 2020.

28 Perry Williams, ‘United Petroleum in oil reserve storage talks’, The Australian, 25 May 2020, reproduced at: https://acapmag.com.au/2020/05/united-petroleum-in-oil-reserve-storage-talks/, accessed on 20 August 2020.

29 Ampol, Change of company name and ASX code, ASX release, 15 May 2020, at: https://wcsecure.weblink.com.au/pdf/CTX/02235798.pdf, accessed on 20 August 2020.

30 Caltex Australia, Australian icon reawakened as new Ampol logo unveiled, media release, 14 May 2020, at: https://www.caltex.com.au/our-company/media-releases/ampol-logo-revealed, accessed on 20 August 2020.

20 Report on the Australian petroleum market—June 2020

2. ACCC activities

2.1 ACCC and the petrol industryThe main role of the ACCC is to enforce the Competition and Consumer Act 2010 (the Act) across the Australian economy, including the fuel industry. The ACCC’s activities under the Act include enforcement and compliance, mergers and acquisitions assessments, authorisations and notifications, and administration of the Oil Code.31

Wholesale and retail petrol prices in Australia are determined by market forces. The ACCC does not set prices in petrol markets and does not have the powers to do so. In the absence of conduct that is in breach of the Act, high petrol prices are not illegal.

The ACCC’s petrol monitoring role is to assist consumers to navigate this complex industry. Through its petrol monitoring reports, industry reports and other information channels, the ACCC promotes transparency in the Australian petroleum industry and improved public awareness of the factors that determine retail petrol prices.

2.2 Activities during the June quarter 20202.2.1 Enhanced price monitoring continued in the June quarterOn 9 March 2020, in the context of the substantial decrease in crude oil prices in early March, the Treasurer discussed with the ACCC the importance of fuel retailers being held to account and Australians getting the benefit from the lower international oil prices.32 In response, the ACCC increased its fuel price monitoring activities. The Chair of the ACCC undertook numerous media interviews relating to petrol issues and identified a number of locations—including Mackay, Townsville, Rockhampton, Cooma, South West Western Australia and Tasmania—where petrol prices were slow to fall. The enhanced monitoring continued in the June quarter.

2.2.2 ACCC authorisations in response to the COVID-19 pandemic COVID-19 is causing major disruptions to our society and the economy, with social distancing measures and travel bans. In that context, the ACCC has received a large number of applications for authorisation, including requests for urgent interim authorisation, from businesses and industry groups looking to co-operate in order to provide financial relief to businesses and individuals; facilitate the supply of goods and services (including medical products and services); and manage the financial impact of a significant economic shock.

The ACCC considers that maintaining competition in the long term will be critical to benefit both consumers and the economy. When considering the applications for authorisation responding to the pandemic, the ACCC is seeking to ensure that changes to the competitive landscape are, wherever possible, temporary.

31 The Oil Code is a prescribed mandatory industry code of conduct, the purpose of which is to regulate the conduct of suppliers, distributors and retailers in the downstream petroleum industry.

32 The Hon Josh Frydenberg MP, Treasurer, Doorstop interview, Parliament House, Canberra, Transcript, 9 March 2020.

21 Report on the Australian petroleum market—June 2020

Australian Institute of Petroleum application for authorisation to enable oil companies to co-operate to secure fuel supply during COVID-19 pandemic

On 2 April 2020, the Australian Institute of Petroleum (AIP) lodged an application for authorisation on behalf of its current members, and any parties approved by the ACCC (collectively, the Participating Entities), to co-operate to improve the security of supply of fuel products and facilitate the efficient use of refining capacity and fuel storage capacity during the COVID-19 pandemic.

To manage the risks associated with large and unpredictable changes in demand and supply, the proposed authorisation would allow refineries and AIP, the industry’s peak body, to make co-ordinated arrangements designed to secure fuel supplies nation-wide.

On 3 April 2020, the ACCC granted urgent interim authorisation, subject to conditions requiring AIP to provide reports to the ACCC and that future parties be approved by the ACCC before they can participate in the arrangements. Interim authorisation enables the Participating Entities to start the arrangements before the ACCC has issued its final decision.

Following receipt of further information from AIP, on 20 May 2020, the ACCC revoked the initial interim authorisation and replaced it with an interim authorisation that more closely reflects how the Participating Entities propose to co-operate. The new interim authorisation only extends to the Participating Entities having discussions and entering into arrangements at meetings of the AIP Board or a committee convened by the AIP Board.

Importantly, the new interim authorisation does not allow fuel companies to co-ordinate prices or to exchange commercially or competitively sensitive information relating to marketing or sales activities.

On 23 July 2020, the ACCC issued a draft determination proposing to grant authorisation subject to three conditions whereby:

� AIP must provide specified information to the ACCC about the details of conduct engaged in under the authorisation

� AIP or the Participating Entities must provide further information to the ACCC about the conduct engaged in, if requested by the ACCC

� any party that wishes to engage in the conduct in the future must seek the approval of the ACCC.33

Allowing fuel companies to co-ordinate the scheduling of importation, storage and delivery in these exceptional times will provide the fuel sector with more capability to help ensure security of supply of fuel products in Australia, and minimise the risk of shortages.

The ACCC considers that the conduct is likely to result in a clear public benefit by improving the security of supply of fuel products to Australian businesses and consumers. While there is a risk that the conduct may facilitate the sharing of certain information between the Participating Entities that may dampen competition, the ACCC considers that this risk is low due to a range of factors, particularly the limited scope of the authorised conduct and the reporting conditions. Overall, the ACCC considers that there are likely to be public benefits from the conduct that outweigh any likely public detriments.

The ACCC proposes to grant conditional authorisation for six months from the date of the final determination. The ACCC aims to make a final decision in September 2020.

33 See: https://www.accc.gov.au/public-registers/authorisations-and-notifications-registers/authorisations-register/australian-institute-of-petroleum.

22 Report on the Australian petroleum market—June 2020

7-Eleven and franchisees application for authorisation to co-operate on store opening times

On 9 April 2020, 7-Eleven Stores Pty Limited (7-Eleven) applied for authorisation to allow it to approach franchisees to implement a program of temporary closure or reduced hours for some of its grocery and fuel stores that have been substantially affected by decreases in demand during the COVID-19 pandemic.

7-Eleven owns and operates stores in competition with its franchisees in some areas and therefore discussions and agreements between them risk breaching the competition laws.

On 24 April 2020, the ACCC granted conditional interim authorisation to enable the parties to commence the conduct while the ACCC considers the substantive application.

On 29 July 2020, the ACCC issued a final determination granting conditional authorisation to enable 7-Eleven and its franchisees to engage in the conduct. The ACCC considers that maintaining competition in the long term will be critical to benefit both consumers and the economy. By providing a temporary mechanism to lessen the economic impact of the COVID-19 pandemic on franchisees, the arrangements may assist in the return to competitive conditions.34

Franchisees are not required to temporarily close or reduce their store hours if they do not wish to. Franchisees that agree to close temporarily will receive an ex-gratia payment from 7-Eleven to cover certain unavoidable operational costs. For franchisees that agree to reduce their hours, the minimum guaranteed income that the franchisee receives from 7-Eleven would be pro-rata adjusted to reflect the temporary reduction in trading hours.

The conditions require 7-Eleven to notify the ACCC of arrangements reached with franchisees to provide some ACCC oversight.

The Franchising Code of Conduct will continue to apply to franchisees that operate non-fuel stores and the Oil Code will continue to apply to franchisees that operate fuel stores. Both codes contain a dispute resolution process.

The ACCC has granted authorisation until 31 March 2021.

2.2.3 Attendance at NT Legislative Assembly public hearings On 5 May 2020, in response to a request from the Northern Territory Chief Minister and public concern about retail petrol prices not reducing in line with changes in both Darwin terminal gate prices and national average weekly petrol prices, the Public Accounts Committee of the Northern Territory Legislative Assembly held a public hearing on Northern Territory fuel prices.35

Representatives of the ACCC attended the public hearing. They noted that the lags between changes in wholesale prices and changes in retail prices were longer in the smaller capital cities, such as Darwin, than in the five largest cities, and that these lags had been exacerbated by the impact of COVID-19 restrictions on the demand for petrol. They also noted that quarterly average retail prices in Darwin had been lower than prices in the five largest cities since the March quarter 2019.

34 See: https://www.accc.gov.au/public-registers/authorisations-and-notifications-registers/authorisations-register/7-eleven-stores-pty-limited.

35 Legislative Assembly of the Northern Territory, Public Accounts Committee, Public Hearing Transcript, 5 May 2020, at: https://parliament.nt.gov.au/__data/assets/pdf_file/0003/882516/FINAL-Public-Hearing-Transcript,-Tueday-5-May-2020.pdf, accessed on 20 August 2020.

23 Report on the Australian petroleum market—June 2020

2.2.4 Stakeholder engagement and communications activityIn the June quarter 2020, the ACCC responded to fuel-related media enquiries on retail fuel prices, petrol price cycles, fuel price information and competition issues. Over 40 responses were prepared for Ministerial correspondence on fuel-related matters, with issues including: high fuel prices in the smaller capital cities and a number of regional locations; retail fuel price differentials between regional locations; fuel price movements in the larger Australian cities, and concerns about possible illegal anti-competitive behaviour in the fuel retailing industry.

In May each year the ACCC usually hosts a meeting of the Fuel Consultative Committee, which comprises representatives from major fuel retailers, refiner-wholesalers, peak industry associations and motoring organisations. However, as a result of the COVID-19 pandemic, this was cancelled.

In the June quarter 2020, the fuel-related pages on the ACCC website received 123 363 page views, a decrease of 29 068 page views (around 19 per cent) from the previous quarter. Of this total, the petrol price cycles web page received 104 425 page views, a decrease of 31 546 (around 23 per cent) from the previous quarter. This was the third most viewed page on the ACCC website in the June quarter 2020.

In 2019–20 the fuel-related pages on the ACCC website received 586 511 page views, a decrease of 4491 page views (around one per cent) from 2018–19. Of this total, the petrol price cycles web page received 533 540 page views, a decrease of 41 535 (around 7 per cent) from 2018–19. The petrol price cycle webpage was the most viewed page on the ACCC website in 2019–20, as it was in 2018–19 and 2017–18.

The ACCC receives enquiries and complaints about fuel-related issues through the year, via the ACCC Infocentre, from members of the public, and referrals from other stakeholders. In 2019–20, the ACCC Infocentre received around 1340 enquiries and complaints about fuel and fuel price related issues. Around half of these were received in March and April 2020, during the early months of the COVID-19 pandemic. The total number of enquiries and complaints about fuel and fuel price related issues in 2019–20 was 50 per cent higher than in 2018–19 (around 880 enquiries).

24 Report on the Australian petroleum market—June 2020

3. Retail petrol price movements in the capital cities

This chapter focuses on petrol prices across the five largest cities (Sydney, Melbourne, Brisbane, Adelaide and Perth). It also examines retail prices in the three smaller capital cities (Canberra, Hobart and Darwin). Petrol prices in regional locations across Australia are discussed in chapter 4.

3.1 Retail prices over the year to June 2020Chart 3.1 shows that seven-day rolling average retail petrol prices in the five largest cities in the year to June 2020 were very volatile, ranging from a high of 159.1 cpl on 18 and 19 December 2019 to a low of 92.4 cpl on 29 April 2020.

Chart 3.1: Seven-day rolling average retail petrol prices in the five largest cities: 1 July 2019 to 30 June 2020

cpl

80

90

100

110

120

130

140

150

160

170

Jul–

19

Aug

–19

Sep–

19

Oct

–19

Nov

–19

Dec

–19

Jan–

20

Feb–

20

Mar

–20

Ap

r–20

May

–20

Jun–

20

Source: ACCC calculations based on data from FUELtrac.

Note: A seven-day rolling average price is the average of the current day’s price and prices on the six previous days. Traditionally, the ACCC has used a seven-day rolling average to smooth out the influence of petrol price cycles in the larger cities on price movements. This has been less effective in recent years because the duration of price cycles in most of the larger cities has become substantially greater than seven days.

In the last six months of 2019 prices gradually trended upwards, reaching a high of 159.1 cpl in mid-December 2019 before decreasing to 141.2 cpl at the end of December 2019. From January 2020 to mid-February 2020 prices gradually trended downwards, before decreasing by over 30 cpl to 117.7 cpl at the end of March 2020.

Prices continued to fall in the first month of the June quarter 2020, falling below one dollar per litre for the first time since March 2005 and reaching a low of 92.4 on 29 April 2020. The last time seven-day rolling average prices were at this level was on 9 January 2005 (92.2 cpl). In real terms, they were the lowest recorded since the ACCC’s predecessor, the Prices Surveillance Authority (PSA), began collecting comprehensive retail prices in all five cities in May 1991. Prices subsequently increased to 123.8 cpl on 15 June 2020, before ending the month at 119.3 cpl.

Average prices in the June quarter 2020 were 109.0 cpl, a decrease of 28.8 cpl from the March quarter 2020 (137.8 cpl).

This was the lowest quarterly average price since the June quarter 2005 (105.2 cpl), and the lowest quarterly average price in real terms since the March quarter 1999 (108.4 cpl). The last

25 Report on the Australian petroleum market—June 2020

time prices in real terms decreased by as much as they did in the June quarter 2020 was in the December quarter 2008 during the Global Financial Crisis (when they decreased by 34.8 cpl).

3.2 Annual average prices Annual average retail petrol prices in the five largest cities in 2019–20 were 134.6 cpl, which was 6.6 cpl lower than in 2018–19 (141.2 cpl), as shown in chart 3.2. In real terms, these were the lowest annual average prices since 2016–17 (when annual average prices were 128.6 cpl).

Chart 3.2: Annual average retail petrol prices in the five largest cities in nominal and real terms: 2000–01 to 2019–20

cpl

Nominal prices Real prices

80

90

100

110

120

130

140

150

160

170

180

2000

–01

2001

–02

2002

–03

2003

–04

2004

–05

2005

–06

2006

–07

2007

–08

2008

–09

2009

–10

2010

–11

2011

–12

2012

–13

2013

–14

2014

–15

2015

–16

2016

–17

2017

–18

2018

–19

2019

–20

Source: ACCC calculations based on data from FUELtrac, Informed Sources and Australian Bureau of Statistics, 6401.0 Consumer Price Index, Australia, June 2020, Tables 1 and 2. CPI: All Groups, Index Numbers and Percentage Changes, at: https://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6401.0June%202020?OpenDocument, accessed 20 August 2020.

Note: Real prices are shown in 2019–20 dollars.

3.3 Retail prices compared with Mogas 95 pricesRetail petrol prices in Australia are primarily determined by international refined petrol prices and the AUD–USD exchange rate. The relevant international benchmark for Australia is the price of Singapore Mogas 95 Unleaded (Mogas 95), which is the price of refined petrol in the Asia-Pacific region.

Chart 3.3 shows that retail petrol prices in the five largest cities and Mogas 95 prices in Australian cents per litre moved in a broadly similar pattern in the year to June 2020. This indicates that, in aggregate, changes in domestic retail prices are generally driven by changes in the international price of refined petrol.

26 Report on the Australian petroleum market—June 2020

Chart 3.3: Monthly average retail petrol prices in the five largest cities and Mogas 95 prices: July 2019 to June 2020

cpl

cpl

Five largest cities (LHS) Mogas 95 (RHS)

10

20

30

40

50

60

70

80

90

80

90

100

110

120

130

140

150

160

Jul–

19

Au

g–1

9

Sep

–19

Oct

–19

No

v–19

Dec

–19

Jan

–20

Feb

–20

Mar

–20

Ap

r–20

May

–20

Jun

–20

Source: ACCC calculations based on data from FUELtrac, Argus Media, OPIS and RBA.

In the year to June 2020:

� monthly average Mogas 95 prices varied by 49.6 cpl, from a high of 70.1 cpl in November 2019 to a low of 20.5 cpl in April 2020

� monthly average retail prices in the five largest cities varied by 47.9 cpl, from a high of 150.5 cpl in October 2019 to a low of 102.6 cpl in April 2020.

Quarterly average Mogas 95 prices were 31.3 cpl in the June quarter 2020, a decrease of 22.3 cpl from the previous quarter.

In April 2020, monthly average Mogas 95 prices in Australian cents per litre decreased to 20.5 cpl, their lowest level since June 1999, before increasing to 41.2 cpl in June 2020. In real terms, monthly average Mogas 95 prices in April 2020 were the lowest since the PSA began collecting comprehensive Mogas 95 data in June 1993.

Monthly average retail petrol prices across the five largest cities in April 2020 were 102.6 cpl, the lowest monthly average since February 2005 (97.8 cpl), and the lowest monthly average in real terms since the PSA began collecting comprehensive retail prices in all five cities in May 1991. Retail prices increased in the two subsequent months and were 15.8 cpl higher in June 2020 (118.4 cpl).

More details on movements in Mogas 95 prices are provided in chapter 5.

3.4 Gross indicative retail differencesGross indicative retail differences (GIRDs) are a broad indicator of gross retail margins. They are calculated by subtracting average TGPs from average retail petrol prices. TGPs are the prices at which petrol can be purchased from wholesalers in the spot market and are posted on a regular basis on the websites of the major wholesalers. Although few wholesale transactions occur at TGPs, they can be regarded as indicative wholesale prices. TGPs, which vary across brands and cities, reflect the wholesale price of petrol only, and exclude other retail operating costs (such as freight, branding, rent, labour and utility costs).

GIRDs are a broad indicator of gross retail margins, and should not be confused with actual retail profits. The GIRDs reported by the ACCC are averages across the five largest cities over time. The level of prices, costs and profits vary significantly between retail operations and not all retail petrol sites will be achieving these gross margins. Some will be achieving higher gross margins, others lower. The ACCC

27 Report on the Australian petroleum market—June 2020

petrol market studies found that profits per retail petrol site could vary considerably between retailers, with some retail sites making substantial profits and others making very little.

3.4.1 Quarterly average GIRDsAverage GIRDs in the five largest cities were 15.9 cpl in the June quarter 2020, a decrease of 0.3 cpl from the previous quarter (see table 3.1).

Table 3.1: Quarterly average retail petrol prices, TGPs and GIRDs in the five largest cities: September quarter 2019 to June quarter 2020

Location Quarter Retail prices cpl

TGPs cpl

GIRDs cpl

Five largest cities Sep–19 142.1 130.4 11.7

Dec–19 149.1 134.1 15.0

Mar–20 137.8 121.6 16.2

Jun–20 109.0 93.1 15.9

  2019–20 134.6 119.9 14.7

Sydney Sep–19 138.1 129.6 8.5

Dec–19 147.1 133.5 13.6

Mar–20 137.9 121.7 16.2

Jun–20 107.8 94.9 12.9

  2019–20 132.8 120.0 12.8

Melbourne Sep–19 143.2 130.3 12.9

Dec–19 149.8 134.1 15.7

Mar–20 139.6 121.7 17.9

Jun–20 110.4 92.7 17.7

  2019–20 135.8 119.8 16.0

Brisbane Sep–19 143.3 130.7 12.6

Dec–19 152.2 134.6 17.6

Mar–20 140.7 121.8 18.9

Jun–20 110.6 92.8 17.8

  2019–20 136.8 120.0 16.8

Adelaide Sep–19 145.5 130.8 14.7

Dec–19 151.1 134.6 16.5

Mar–20 136.1 122.0 14.1

Jun–20 110.0 93.0 17.0

  2019–20 135.8 120.2 15.6

Perth Sep–19 140.6 130.4 10.2

Dec–19 145.4 133.9 11.5

Mar–20 134.5 121.1 13.4

Jun–20 106.3 92.1 14.2

  2019–20 131.8 119.5 12.3

Source: ACCC calculations based on data from FUELtrac, BP, Caltex, Mobil, Viva Energy and WA FuelWatch.

Note: Retail prices, TGPs and GIRDs in Sydney are for E10.

28 Report on the Australian petroleum market—June 2020

In the June quarter 2020, average GIRDs decreased in Sydney, Melbourne and Brisbane, and increased in Adelaide and Perth.

Table 3.1 shows that in the five largest cities in 2019–20 quarterly average GIRDs:

� varied significantly over the year and across cities, ranging from a high of 18.9 cpl (in Brisbane in the March quarter 2020) to a low of 8.5 cpl (in Sydney in the September quarter 2019)

� were lowest in Sydney, Melbourne, Brisbane and Perth in the September quarter 2019, and lowest in Adelaide in the March quarter 2020

� were highest in Sydney, Melbourne and Brisbane in the March quarter 2020 and highest in Adelaide and Perth in the June quarter 2020.

3.4.2 Annual average GIRDsAnnual average GIRDs across the five largest cities in 2019-20 were 14.7 cpl, which was 2.7 cpl higher than the average GIRDs in 2018–19 (12.0 cpl). Annual average GIRDs were the highest in Brisbane (16.8 cpl) and the lowest in Perth (12.3 cpl).

In real terms, annual average GIRDs in the five largest cities increased by 2.5 cpl to the highest annual average GIRD on record. This is shown in chart 3.4.

In 2019–20, annual average GIRDs in all capital cities except Perth increased to their highest level in real terms since the ACCC began monitoring them in 2002. In Perth, annual average GIRDs decreased in 2019–20 from 12.6 cpl in 2018–19 to 12.3 cpl in 2019–20.

Chart 3.4: Annual average GIRDs in the five largest cities in real terms: 2002–03 to 2019–20

cpl

Real GIRDs Long-term average (real terms)

Period avg: 8.9 cpl

4

6

8

10

12

14

16

2002

–03

2003

–04

2004

–05

2005

–06

2006

–07

2007

–08

2008

–09

2009

–10

2010

–11

2011

–12

2012

–13

2013

–14

2014

–15

2015

–16

2016

–17

2017

–18

2018

–19

2019

–20

Source: ACCC calculations based on data from FUELtrac, Informed Sources, BP, Caltex, Mobil, Viva Energy and WA FuelWatch, and Australian Bureau of Statistics, 6401.0 Consumer Price Index, Australia, June 2020, Tables 1 and 2. CPI: All Groups, Index Numbers and Percentage Changes, at: https://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6401.0 June%202020?OpenDocument, accessed on 20 August 2020.

Note: Real prices are shown in 2019–20 dollars.

The ACCC recently analysed financial data provided by petrol companies on retail gross profits (i.e. retail operating costs and net profits) from 2005–06 to 2017–18 to further understand the reasons for the higher GIRDs over time.36 The analysis found that both retail operating costs and net profits on RULP increased during the period, and particularly between 2013–14 and 2016–17, suggesting that higher GIRDs had been influenced by increases in both operating costs and profits. The analysis compared GIRDs (which are based on price data) with retail gross profit financial results on RULP

36 ACCC, Financial performance of the Australian downstream petroleum industry 2002 to 2018, 22 April 2020, pp. 34–36.

29 Report on the Australian petroleum market—June 2020

(which are based on financial data). Both measures, although not directly comparable, showed a broadly similar upward trend over the longer term.

3.4.3 Higher GIRDs in 2019–20 are likely to have been influenced by the large decreases in TGPs and COVID-19 restrictions

There are a couple of inter-related factors that may have contributed to the higher average GIRDs in the March and June quarters 2020 and in financial year 2019–20.

Historically GIRDs tend to increase when TGPs decrease sharply

Past ACCC analysis has found that GIRDs are influenced by large changes in TGPs over a short period of time. When TGPs increase by large amounts in a short period, lags between changes in TGPs and changes in retail prices often have the effect of reducing GIRDs in the short term. Conversely, when TGPs decrease by large amounts in a short period—which occurred in the March and June quarters 2020—these lags often have the effect of increasing GIRDs.

The lags in the March and June quarters 2020 are likely to have been exacerbated by the substantial reduction in demand arising from the COVID-19 restrictions, which will have further increased the fuel turnover time in many locations.

Some retailers may not have been passing on the full decrease in TGPs to retail prices

Petrol retailing is a high-volume low-margin business with many fixed costs (such as rent and branding). This means that when sales volumes decline, as they did in the June quarter 2020 due to the implementation of COVID-19 restrictions, the cost per unit of petrol will increase. As a result, in order to keep revenue to partially cover their fixed costs in this period, some retailers may not have been passing on the full decreases in TGPs to retail prices. This was suggested by comments made in the June quarter 2020 by a couple of industry participants.

Mark McKenzie, the CEO of the Australasian Convenience and Petroleum Marketers Association, posted a video on the Association’s website on 24 April 2020, commenting that: 37

‘…service station volumes have fallen, on average across the country, by between 45 and 50 per cent. That actually means our revenue from fuel sales has actually fallen by 45 to 50 per cent, but our costs haven’t changed. There’s nothing magical about a fuel retail business. It’s like any retail business. You need a sufficient amount of revenue to come in to cover your costs and provide a reasonable profit. And if you get a 50 per cent fall in revenue, then you’ve actually got a real challenge.

You can either go to a point where you keep discounting to the point where you continue to capture the same net profit margin that you would from a normal volume, which means that you would actually lose 50 per cent of the revenue, or you keep some of that by actually charging a slightly higher retail price. And on that basis, you’re getting a slightly higher margin to continue to cover your costs.

Now, if service stations didn’t do that, particularly in regional areas, then the problem would be that business would be put into jeopardy, and the very existence of that service station would be put into threat, particularly if COVID-19 runs for a long period. So what service stations operators are actually doing is really balancing this tension between maintaining their viability in the face of a dramatic fall, and also making sure that they remain competitive with the service stations that are actually competing around them.’

37 Australasian Convenience and Petroleum Marketers Association, ACCC media appears to incite aggression at servos, 24 April 2020, at: https://acapmag.com.au/2020/04/accc-media-appears-to-incite-aggression-at-servos/, accessed on 20 August 2020. Mr McKenzie made similar comments at the Public hearing of the Public Accounts Committee of the Legislative Assembly of the Northern Territory on 5 May 2020. See: Legislative Assembly of the Northern Territory, Public Accounts Committee, Public Hearing Transcript, 5 May 2020, at: https://parliament.nt.gov.au/__data/assets/pdf_file/0003/882516/FINAL-Public-Hearing-Transcript,-Tueday-5-May-2020.pdf, pp. 11–12 and 24–25, accessed on 20 August 2020.

30 Report on the Australian petroleum market—June 2020

According to an article in the Australian Financial Review of 16 June 2020, the Chief Executive of Viva Energy, Scott Wyatt, was reported to have said:38

‘…there is no doubt that retail margins have been supported - have benefited - from the sharp falls in oil prices that occurred through the first half of the year.

And that’s the natural delay or lag, I guess, and then that ultimately is reflected in retail pump prices.

We’re now seeing the reverse as prices increase and there’s compression of retail margins as well. So that’s just the normal dynamics of the retail market.

But I think it’s a rational market.

I think obviously every player in the market has seen the sorts of volume declines that we’ve seen and that has obviously been supportive of all competitors to be rational in terms of pricing, because obviously there’s significant costs that still need to be paid, such as leases and wages and so on across the business.’

The influence of these factors is reflected in the change in the shape of the petrol price cycles in the five largest cities since March 2020 (when TGPs decreased sharply). In Sydney, Melbourne, Brisbane and Adelaide, the price cycles became longer in duration and did not get as close to TGPs as they had previously at the trough price. In Perth, while regular weekly price cycles continued, they also did not get as close to TGPs as they had previously at the trough price. This can be seen in charts 3.5 and 3.6, which show daily average retail petrol prices, TGPs and GIRDs in Brisbane and Perth respectively in 2019–20.39

Chart 3.5: Daily average retail petrol prices, TGPs and GIRDs in Brisbane: 2019–20

-10

10

30

50

70

90

110

130

150

170

190

Jul–

19

Au

g–1

9

Sep

–19

Oct

–19

No

v–19

Dec

–19

Jan

–20

Feb

–20

Mar

–20

Ap

r–20

May

–20

Jun

–20

cpl

GIRDRetail price TGP

Source: ACCC calculations based on data from FUELtrac, BP, Caltex, Mobil and Viva Energy.

38 Tony Boyd, Chanticleer, ‘Behind Viva Energy’s profit upgrade’, Australian Financial Review, 16 June 2020, at: https://www.afr.com/chanticleer/behind-viva-energy-s-profit-upgrade-20200616-p5530y, accessed on 20 August 2020.

39 Charts for Sydney, Melbourne and Adelaide are at appendix A.

31 Report on the Australian petroleum market—June 2020

Chart 3.6: Daily average retail petrol prices, TGPs and GIRDs in Perth: 2019–20

-10

10

30

50

70

90

110

130

150

170

190

cpl

Jul–

19

Au

g–1

9

Sep

–19

Oct

–19

No

v–19

Dec

–19

Jan

–20

Feb

–20

Mar

–20

Ap

r–20

May

–20

Jun

–20

GIRDRetail price TGP

Source: ACCC calculations based on data from FUELtrac, BP, Caltex, Mobil, Viva Energy and WA FuelWatch.

3.5 Elements of the price changeThere are three broad components of the retail price of petrol: the international price of refined petrol, taxes (excise and GST) and other costs and margins at the wholesale and retail levels.

3.5.1 Change in the June quarter 2020Chart 3.7 shows the change in these components across the five largest cities between the March quarter 2020 and June quarter 2020. The chart also separates the other costs and margins component into two elements: other wholesale costs and margins (which includes international shipping costs and other import costs, and wholesale costs and margins), and retail costs and margins (represented by GIRDs).

32 Report on the Australian petroleum market—June 2020

Chart 3.7: Changes in the components of average retail petrol prices in the five largest cities: March quarter 2020 to June quarter 2020

53.6

Mar-20 Mogas 95 Exchange rate Other wholesalecosts and margins

Taxes GIRDs Jun-20

cpl

Mogas 95 Other wholesale costs and margins Taxes GIRDs

137.8 cpl -22.4 cpl

+0.1 cpl

-22.3 cpl

-3.8 cpl -2.4 cpl-0.3 cpl 109.0 cpl

-28.8 cpl

53.6

31.3

14.8

11.0

53.2

50.8

16.2

15.9

0

20

40

60

80

100

120

140

160

Source: ACCC calculations based on data from FUELtrac, Argus Media, BP, Caltex, Mobil, Viva Energy, WA FuelWatch, RBA and ATO.

Notes: All prices are in Australian cents per litre.

The taxes component includes fuel excise and wholesale GST. The small amount of retail GST is included in GIRDs rather than in taxes, to be consistent with GIRDs reported elsewhere in this report.

The decrease in the average retail price in the five largest cities by 28.8 cpl in the June quarter 2020 was driven predominately by a decrease in the price of Mogas 95 (22.3 cpl).

The AUD–USD exchange rate can be a significant determinant of Australia’s retail petrol prices because international refined petrol is bought and sold in US dollars in global markets. Excluding the small effect of a change in the AUD–USD exchange rate (which decreased by around US 0.1 cent in the quarter), Mogas 95 prices would have decreased by 22.4 cpl in the quarter.

Lower retail prices were also influenced by decreases in other wholesale costs and margins (3.8 cpl), taxes (2.4 cpl) and GIRDs (0.3 cpl). Taxes decreased during the June quarter 2020 due to less GST generated from the lower wholesale prices.

As a result of the significantly lower international refined petrol prices, this was the first quarter since the September quarter 2016 that taxes accounted for a larger proportion of total petrol costs than Mogas 95 prices. The two largest components of the average retail price—Mogas 95 and taxes—accounted for around 77 per cent of the average price of petrol in the June quarter 2020.40

40 In this calculation, taxes includes fuel excise, and both wholesale and retail GST.

33 Report on the Australian petroleum market—June 2020

3.5.2 Change in 2019–20Chart 3.8 shows the annual change in the components of the retail petrol price between 2018–19 and 2019–20. It also shows the components in 2017-18 when annual average petrol prices were almost the same as in 2019–20.

Chart 3.8: Changes in the components of average retail petrol prices in the five largest cities: 2017–18 to 2019–20

53.6

cpl

Mogas 95 Other wholesale costs and margins Taxes GIRDs

141.2 cpl -13.7 cpl

+2.9 cpl

-10.8 cpl

+1.6 cpl-0.1 cpl +2.7 cpl 134.6 cpl

-6.6 cpl

53.6

31.3

11.0

53.2

50.8

0

20

40

60

80

100

120

140

160

61.4 66.055.2

9.110.2

11.8

51.653.0

52.9

12.412.0

14.7

2017–18 2018–19 Mogas 95 Exchangerate

Other wholesalecosts and margins

Taxes GIRDs 2019–20

134.5 cpl

Source: ACCC calculations based on data from FUELtrac, Argus Media, OPIS, BP, Caltex, Mobil, Viva Energy, WA FuelWatch, RBA and ATO.

Notes: All prices are in Australian cents per litre.

The taxes component includes fuel excise and wholesale GST. The small amount of retail GST is included in GIRDs rather than in taxes, to be consistent with GIRDs reported elsewhere in this report.

In 2019–20, the annual average retail petrol price in the five largest cities decreased by 6.6 cpl to 134.6 cpl. The most significant contributor to this decrease was Mogas 95 prices, which decreased by 10.8 cpl to 55.2 cpl in 2019–20.

Excluding the effect of changes in the AUD–USD exchange rate, Mogas 95 prices would have decreased by 13.7 cpl in 2019–20. However, the decrease in the AUD–USD exchange rate offset the decrease in Mogas 95 prices by 2.9 in Australian cents per litre terms. This resulted in a net decrease of 10.8 cpl in Mogas 95 prices in Australian cents per litre terms.

The decrease in Mogas 95 prices was offset by increases in other wholesale costs and margins (1.6 cpl), and GIRDs (2.7 cpl). Taxes decreased by 0.1 cpl in 2019–20.

Annual average prices in 2019-20 were almost the same as annual average prices in 2017–18 (134.5 cpl). Despite retail prices being almost identical, average Mogas 95 prices were 6.2 cpl higher in 2017–18 than in 2019–20. This was offset by higher other wholesale costs and margins (2.7 cpl), taxes (1.3 cpl) and GIRDs (2.3 cpl) in 2019–20 relative to 2017–18. This highlights how the components of retail petrol prices can vary over time.

34 Report on the Australian petroleum market—June 2020

3.6 Retail prices in Brisbane were higher than the other four largest cities in aggregate

Retail prices in Brisbane are generally the highest among the five largest cities. In the June quarter 2020, average retail prices in Brisbane (110.6 cpl) were again the highest, and were 4.3 cpl higher than the lowest average retail prices for the quarter, observed in Perth (106.3 cpl).

Chart 3.9 shows quarterly average retail prices in Brisbane and average prices across the other four largest cities (i.e. Sydney, Melbourne, Adelaide and Perth) over the two years to June 2020. Over this period, Brisbane retail prices were on average 2.6 cpl higher than the average across the other four largest cities (ranging from a low of 0.9 cpl in the December quarter 2018 to a high of 3.9 cpl in the December quarter 2019).

Chart 3.9: Quarterly average retail prices in Brisbane and the other four largest cities: September quarter 2018 to June quarter 2020

cpl

Brisbane Other four largest cities

100

110

120

130

140

150

160

Sep

–18

Dec

–18

Mar

–19

Jun

–19

Sep

–19

Dec

–19

Mar

–20

Jun

–20

Source: ACCC calculations based on data from FUELtrac.

In the June quarter 2020, average retail prices in Brisbane were 2.0 cpl higher than the other four largest cities in aggregate (108.6 cpl). This was 1.7 cpl lower than the differential in the March quarter 2020 (3.7 cpl).

In 2019–20, Brisbane retail prices were on average 2.8 cpl higher than the average across the other four largest cities. This was 0.5 cpl higher than the differential in 2018–19 (2.3 cpl).

The ACCC released its report on the Brisbane petrol market in October 2017.41 It noted that petrol prices in Brisbane had been significantly higher than those in the other four largest cities in the period 2009–10 to 2016–17. Over those eight years, Brisbane motorists paid on average 3.3 cpl more for petrol than motorists in the other four largest cities.

The report found that the main factor influencing the higher prices in Brisbane was higher retail margins on petrol, which contributed to profits in Brisbane being significantly higher than the average across Australia. It also found that retail pricing was less competitive in Brisbane, with retailers setting prices higher at the top and bottom of the price cycle than retailers in Sydney. Furthermore, Brisbane had fewer retail chains that were effective and vigorous price competitors. Brisbane had only four retailers in this category (7-Eleven, Woolworths, Puma Energy and United), while Sydney had seven (Speedway, Metro, Budget, Westside, United, 7-Eleven and Woolworths).

41 ACCC, Report on the Brisbane petrol market, October 2017, at: https://www.accc.gov.au/publications/petrol-market-studies/report-on-the-brisbane-petrol-market.

35 Report on the Australian petroleum market—June 2020

3.7 Price cycles in the five largest citiesRetail petrol prices in the five largest cities in Australia move in cycles. These price cycles do not occur in the smaller capital cities or in most regional locations. Price cycles are the result of pricing decisions made by petrol retailers aiming to maximise profits. They only occur at the retail level; wholesale prices do not exhibit similar cyclical movements.

Table 3.2 shows that over 2019-20, the number of price cycles in each quarter varied in Sydney, Melbourne, Brisbane and Adelaide.

Table 3.2: Number of price cycles per quarter in the five largest cities: September quarter 2019 to June quarter 2020

Quarter Sydney Melbourne Brisbane Adelaide Perth

Sep–19 3 4 3 5 13

Dec–19 4 3 4 5 13

Mar–20 3 3 3 5 13

Jun–20 2 2 2 7 13

2019–20 12 12 12 22 52

Source: ACCC calculations based on data from FUELtrac.

In the June quarter 2020, Sydney, Melbourne and Brisbane had one less price cycle than in the previous quarter, and Adelaide had an additional two price cycles. The number of cycles in Perth remained unchanged.

Perth had the most price cycles in the June quarter 2020, with price cycles occurring on a weekly basis (as they have done since 2011). In the past, these cycles have been highly predictable for motorists, with the lowest price occurring on a Monday and the highest price occurring on a Tuesday. However, during the March quarter 2020 this changed with the lowest price occurring on a Tuesday and the highest price occurring on a Wednesday. This change continued in the June quarter 2020. The consistency of price cycles in Perth may have been influenced by the WA FuelWatch scheme, which has been in operation since 2001.

The ACCC released a report on petrol price cycles in Australia in December 2018.42 The report noted that while motorists find price cycles frustrating, they could use price cycles to their advantage to make substantial savings across the year.

42 ACCC, Petrol price cycles in Australia, December 2018, at: https://www.accc.gov.au/publications/petrol-industry-reports/petrol-price-cycles-in-australia.

36 Report on the Australian petroleum market—June 2020

3.8 Prices in the three smaller capital citiesThe differential between retail petrol prices in the three smaller capital cities (Canberra, Hobart and Darwin) and the five largest cities increased to 10.2 cpl in the June quarter 2020, compared with 7.6 cpl in the previous quarter. Chart 3.10 shows that in 2019–20, monthly average retail prices were:

� always highest in Hobart

� lower in Darwin than in the five largest cities except for March, April and May 2020

� higher in Canberra than in the five largest cities except for October 2019 and June 2020.

Chart 3.10: Monthly average retail petrol prices in Canberra, Hobart, Darwin and the five largest cities: July 2019 to June 2020

cpl

Canberra Hobart Darwin Five largest cities

90

100

110

120

130

140

150

160

170

Jul–

19

Au

g–1

9

Sep

–19

Oct

–19

No

v–19

Dec

–19

Jan

–20

Feb

–20

Mar

–20

Ap

r–20

May

–20

Jun

–20

Source: ACCC calculations based on data from FUELtrac.

In the June quarter 2020, average retail prices were:

� 116.0 cpl in Darwin, which was 7.0 cpl higher than in the five largest cities (109.0 cpl)

� 115.2 cpl in Canberra (6.2 cpl higher)

� 126.3 cpl in Hobart (17.3 cpl higher).

Factors that may lead to relatively higher prices in Canberra, Hobart and Darwin are similar to those factors influencing prices in regional locations (outlined in section 4.1).

Recent movements in Darwin retail prices are discussed further in appendix C.

37 Report on the Australian petroleum market—June 2020

3.9 Retail prices of the main petrol gradesChart 3.11 shows that retail prices of the main grades of unleaded petrol—RULP, premium unleaded petrol (PULP) 95, PULP 98, and E10—all moved in a similar manner over the year to June 2020.43

Chart 3.11: Monthly average retail prices of RULP, PULP 95, PULP 98 and E10 in the five largest cities: July 2019 to June 2020

cpl

RULP PULP 95 PULP 98 E10

85

95

105

115

125

135

145

155

165

175

185

Jul–

19

Au

g–1

9

Sep

–19

Oct

–19

No

v–19

Dec

–19

Jan

–20

Feb

–20

Mar

–20

Ap

r–20

May

–20

Jun

–20

Source: ACCC calculations based on data from FUELtrac.

In the June quarter 2020, the average differential in the five largest cities between:

� RULP and PULP 95 prices was 14.4 cpl (an increase of 0.8 cpl from the previous quarter)

� RULP and PULP 98 prices was 22.1 cpl (an increase of 0.1 cpl)

� E10 and RULP was 1.0 cpl (a change of 1.2 cpl).44

Retail prices of the main grades of petrol move in a similar manner because they are all influenced by international refined petrol benchmark prices (which, in turn, predominantly move in line with changes in the international price of crude oil).

The ACCC noted in its recent industry report on the financial performance of the downstream petroleum industry that over a longer period PULP 95 and PULP 98 have become more expensive relative to the retail price of RULP, and that PULP was significantly more profitable than other petrol products.

Between 2009–10 and 2017–18, the annual average price differential in real terms between RULP and PULP 95 increased from 10.9 cpl to 13.0 cpl, an increase of 2.1 cpl. The annual average price differential between RULP and PULP 98 similarly increased from 16.5 cpl to 20.4 cpl, an increase of 3.9 cpl.

Higher average prices for PULP, relative to RULP, can be influenced by a variety of factors, including adjustments to specific international benchmarks and potentially changes in the quality of PULP products. However, the increases in PULP prices in recent years may be translating, at least in part, to higher profits on PULP.

43 E10 prices are for Sydney and Brisbane only. RULP prices in Sydney are used in this section to calculate average RULP prices in the five largest cities.

44 Historically, E10 prices have generally been lower than RULP prices. In March 2020 average RULP prices in Adelaide were significantly lower than those the other largest cities, which had the effect of reducing average RULP prices across the five largest cities to levels below average E10 prices across Sydney and Brisbane (a 0.2 cpl difference overall). In the June quarter 2020, average E10 prices in the five largest cities reverted back to being lower than RULP prices (by 1.0 cpl on average).

38 Report on the Australian petroleum market—June 2020

3.10 Components of petrol prices in 2019-20Chart 3.12 summarises the components of the retail petrol price shown in section 3.5.45 It shows that the two largest components of the pump price—Mogas 95 and taxes—accounted for 81 per cent of the price of petrol in 2019–20 (a decrease of 4 percentage points from 2018–19). These components are largely outside the control of local petrol retailers.

Chart 3.12: Components of the annual average retail petrol price in the five largest cities in 2019–20

Mogas 95 Taxes Other costs and margins

PETROL134.6 cpl

cpl %

25.2 19

54.2 40

55.2 41

Source: ACCC calculations based on data from FUELtrac, Argus Media, OPIS, RBA and ATO.

In 2019–20, as a proportion of the annual average price:

� Mogas 95 decreased to 41 per cent, from 47 per cent in 2018–19

� taxes increased to 40 per cent, from 38 per cent in 2018–19

– there was an increase in petrol excise of 0.7 cpl in 2019–20

� other costs and margins increased to 19 per cent, from 15 per cent in 2018–19.

45 Taxes include fuel excise, and both the wholesale and retail components of the GST.

39 Report on the Australian petroleum market—June 2020

3.11 Petrol prices in Australia and other OECD countriesCompared with other developed countries, Australia’s retail petrol prices are relatively low. However, a degree of caution needs to be exercised when comparing international petrol prices, because fuel quality standards and taxation rates differ among countries, as does the availability and use of fuel types.

Chart 3.13 shows average retail PULP 95 prices—both including and excluding taxes—among 33 countries in the Organisation for Economic Co-operation and Development (OECD) in the March quarter 2020 (the latest data available). It shows that of these countries, Australia had the third-lowest retail PULP 95 prices.

Chart 3.13: Average retail PULP 95 prices and taxes in OECD countries: Australian cents per litre, March quarter 2020

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 210 220 230 240 250 260 270 280 290

United States

Canada

Australia

Chile

Turkey

Poland

Hungary

Austria

Lithuania

Czech Republic

Luxembourg

Latvia

Slovenia

Spain

Slovak Republic

New Zealand

Estonia

Korea

Ireland

Belgium

Sweden

Germany

United Kingdom

Switzerland

France

Portugal

Norway

Finland

Denmark

Italy

Greece

Israel

Netherlands

Australian cpl Price less tax Tax component Average price less tax

Source: DISER, Australian Petroleum Statistics, issue 287, June 2020 at: https://www.energy.gov.au/publications/australian-petroleum-statistics-2020, accessed on 20 August 2020.

Note: All international prices shown are for PULP 95 RON, except for New Zealand (96 RON).

As shown, the main reason for the lower retail petrol prices in Australia is the relatively low rate of taxation on fuel. In the March quarter 2020, taxes made up around 36 per cent of retail PULP 95 prices in Australia. This is much lower than in many OECD countries—the average tax component on PULP 95 prices in the OECD was around 58 per cent in the March quarter 2020. Excluding taxes, PULP 95 prices in Australia were the equal eighth-highest of the OECD countries.

40 Report on the Australian petroleum market—June 2020

Chart 3.14 shows average retail RULP prices—both including and excluding taxes—among eight OECD countries in the March quarter 2020. In the majority of OECD countries, RULP is not sold in significant quantities. The chart shows that Australia had the third-lowest retail RULP prices among these countries. Excluding taxes, RULP prices in Australia were the third-highest of the OECD countries.

Chart 3.14: Average retail RULP prices and taxes in OECD countries: Australian cents per litre, March quarter 2020

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 210 220

Australian cpl

Price less tax Tax component Average price less tax

United States

Canada

Australia

Chile

Korea

Austria

New Zealand

Japan

Source: DISER, Australian Petroleum Statistics, issue 287, June 2020 at: https://www.energy.gov.au/publications/australian-petroleum-statistics-2020, accessed on 20 August 2020.

41 Report on the Australian petroleum market—June 2020

4. Retail petrol price movements in regional locations

The ACCC monitors fuel prices in all capital cities and over 190 regional locations across Australia. These locations are identified in appendix B.

4.1 Influences on regional petrol pricesMovements in retail petrol prices in regional locations are largely driven by changes in international refined petrol prices and the AUD–USD exchange rate, as they are in the five largest cities.

However, prices are generally higher in regional locations. A number of factors may contribute to these higher prices, including:

� a lower level of local competition

� lower volumes of fuel sold

� distance/location factors

� lower convenience store sales.

The influence of these factors varies significantly from location to location. This means that there may be substantial differences in prices between specific regional locations.

4.2 Regional petrol prices in aggregateIn the June quarter 2020, average prices in regional locations in aggregate (regional prices) were 116.5 cpl. This was 7.5 cpl higher than average prices in the five largest cities (109.0 cpl). In the March quarter 2020, average regional prices were 6.7 cpl higher than average prices in the five largest cities.

Chart 4.1 shows that monthly average regional prices decreased in the June quarter 2020. In April 2020, monthly average regional prices were 120.9 cpl, a decrease of 18.0 cpl from March 2020 (138.9 cpl). Prices decreased further to 111.6 cpl in May 2020 before increasing to 117.2 cpl in June 2020.

Chart 4.1: Monthly average retail petrol prices in regional locations in aggregate and the five largest cities: July 2019 to June 2020

cpl

All regional locations Five largest cities

100

110

120

130

140

150

160

Jul–

19

Aug

–19

Sep

–19

Oct

–19

Nov

–19

Dec

–19

Jan–

20

Feb

–20

Mar

–20

Ap

r–20

May

–20

Jun–

20

Source: ACCC calculations based on data from FUELtrac.

42 Report on the Australian petroleum market—June 2020

Between March 2020 and June 2020, monthly average prices in regional locations decreased by 21.7 cpl, which was almost four times the decrease across the five largest cities over the same period (5.6 cpl). This decrease was driven by the significant decrease in the international price of refined petrol in April 2020, which continued from the March quarter 2020. International price movements during the quarter are analysed further in chapter 5.

The monthly average differential between regional prices and prices in the five largest cities varied substantially over 2019-20, ranging from 18.3 cpl above the five largest cities in April 2020 to 1.2 cpl below in June 2020.

In June 2020, average prices in 62 locations (representing around 35 per cent of monitored locations) were higher than the average price in the five largest cities.

In 2019–20, the annual average differential between regional prices and prices in the five largest cities was 4.0 cpl, which was 2.5 cpl lower than in 2018-19 (6.5 cpl).

Further information on petrol price movements in the June quarter 2020 in all locations monitored by the ACCC is presented in appendix B.

4.2.1 Regional prices and lagsWhile retail petrol prices in regional locations generally follow movements in the international price of refined petrol, they often do not respond as quickly—either up or down—as prices in the five largest cities.

For example, average petrol prices in the five largest cities increased in July 2019 in line with international refined petrol prices, whereas average petrol prices in regional locations continued to decrease. Conversely, average petrol prices in the five largest cities decreased substantially between February and April 2020 (in line with international refined petrol prices) while average petrol prices in regional locations decreased by a smaller amount. Regional petrol prices continued to decrease in May 2020, while prices in the five largest cities increased.

One reason for the ‘stickiness’ of retail petrol prices in many regional locations is that there are lags between a change in wholesale prices and a change in retail prices. These lags are primarily influenced by the frequency of retail site turnover of fuel, and are longer in regional locations where volume turnover is smaller and the degree of competition is often not as intense. Additionally, during the COVID-19 situation there have been fewer motorists purchasing fuel from retail sites, which further increased the turnover time.

Another influence is that there are some regional locations where retail prices do not change by the same amount as a change in wholesale prices, both when wholesale prices decrease and when they increase. This is often related to the size and geographical location of the regional location, as well as the degree of retail competition.

4.3 Prices in each of the states and territoriesCharts 4.2 to 4.8 show seven-day rolling average retail petrol prices in regional locations in each state and the NT, along with those of the relevant capital city, from 1 July 2019 to 30 June 2020. These charts also show the average differential between prices in regional locations in the state/territory and the respective capital city in the months of March 2020 and June 2020, and in 2019-20. In June 2020, monthly average regional prices were higher than average capital city prices in NSW, WA and the NT, and lower in Victoria, Queensland, SA and Tasmania.

43 Report on the Australian petroleum market—June 2020

Chart 4.2: Seven-day rolling average petrol prices in NSW regional locations and Sydney: 1 July 2019 to 30 June 2020

cpl

NSW regional locations Sydney

Mar avg: 11.7 cpl

2019–20 avg: 5.8 cpl

Jun avg: 0.2 cpl

80

90

100

110

120

130

140

150

160

170Ju

l–19

Au

g–1

9

Sep

–19

Oct

–19

No

v–19

Dec

–19

Jan

–20

Feb

–20

Mar

–20

Ap

r–20

May

–20

Jun

–20

Source: ACCC calculations based on data from FUELtrac.

Notes: E10 prices are used for Sydney and RULP prices are used for all NSW regional locations.

A seven-day rolling average price is the average of the current day’s price and prices on the six previous days.

Chart 4.3: Seven-day rolling average petrol prices in Victorian regional locations and Melbourne: 1 July 2019 to 30 June 2020

cpl

Victorian regional locations Melbourne

Mar avg: 8.5 cpl

2019–20 avg: -0.2 cpl

Jun avg: -6.0 cpl

80

90

100

110

120

130

140

150

160

170

Jul–

19

Aug

–19

Sep

–19

Oct

–19

Nov

–19

Dec

–19

Jan–

20

Feb

–20

Mar

–20

Ap

r–20

May

–20

Jun–

20

.

Source: ACCC calculations based on data from FUELtrac.

Note: A seven-day rolling average price is the average of the current day’s price and prices on the six previous days.

44 Report on the Australian petroleum market—June 2020

Chart 4.4: Seven-day rolling average petrol prices in Queensland regional locations and Brisbane: 1 July 2019 to 30 June 2020

cpl

Queensland regional locations Brisbane

Mar avg: 7.9 cpl

2019–20 avg: 0.1 cpl

Jun avg: -5.7 cpl

80

90

100

110

120

130

140

150

160

170Ju

l–19

Aug

–19

Sep

–19

Oct

–19

No

v–19

Dec

–19

Jan–

20

Feb

–20

Mar

–20

Ap

r–20

May

–20

Jun–

20

Source: ACCC calculations based on data from FUELtrac.

Note: A seven-day rolling average price is the average of the current day’s price and prices on the six previous days.

Chart 4.5: Seven-day rolling average petrol prices in SA regional locations and Adelaide: 1 July 2019 to 30 June 2020

cpl

SA regional locations Adelaide

Mar avg: 21.6 cpl

2019–20 avg: 1.6 cpl

Jun avg: -3.3 cpl

80

90

100

110

120

130

140

150

160

170

Jul–

19

Aug

–19

Sep

–19

Oct

–19

Nov

–19

Dec

–19

Jan–

20

Feb

–20

Mar

–20

Ap

r–20

May

–20

Jun–

20

Source: ACCC calculations based on data from FUELtrac.

Note: A seven-day rolling average price is the average of the current day’s price and prices on the six previous days.

45 Report on the Australian petroleum market—June 2020

Chart 4.6: Seven-day rolling average petrol prices in WA regional locations and Perth: 1 July 2019 to 30 June 2020

cpl

WA regional locations Perth

Mar avg: 20.7 cpl

2019–20 avg: 11.8 cpl

Jun avg: 7.8 cpl

80

90

100

110

120

130

140

150

160

170Ju

l–19

Au

g–1

9

Sep

–19

Oct

–19

No

v–19

Dec

–19

Jan

–20

Feb

–20

Mar

–20

Ap

r–20

May

–20

Jun

–20

Source: ACCC calculations based on data from FUELtrac.

Note: A seven-day rolling average price is the average of the current day’s price and prices on the six previous days.

Chart 4.7: Seven-day rolling average petrol prices in Tasmanian regional locations and Hobart: 1 July 2019 to 30 June 2020

cpl

Tasmanian regional locations Hobart

Mar avg: -1.8 cpl

2019–20 avg: -2.2 cpl

Jun avg: -1.0 cpl

80

90

100

110

120

130

140

150

160

170

Jul–

19

Au

g–1

9

Se

p–1

9

Oc

t–1

9

No

v–1

9

De

c–1

9

Jan

–20

Fe

b–2

0

Ma

r–2

0

Ap

r–2

0

Ma

y–2

0

Jun

–20

Source: ACCC calculations based on data from FUELtrac.

Note: A seven-day rolling average price is the average of the current day’s price and prices on the six previous days.

46 Report on the Australian petroleum market—June 2020

Chart 4.8: Seven-day rolling average petrol prices in NT regional locations and Darwin: 1 July 2019 to 30 June 2020

cpl

NT regional locations Darwin

Mar avg: 16.7 cpl

2019–20 avg: 14.3 cpl

Jun avg: 12.6 cpl

80

90

100

110

120

130

140

150

160

170Ju

l–19

Au

g–1

9

Sep

–19

Oct

–19

No

v–19

Dec

–19

Jan

–20

Feb

–20

Mar

–20

Ap

r–20

May

–20

Jun

–20

Source: ACCC calculations based on data from FUELtrac.

Note: A seven-day rolling average price is the average of the current day’s price and prices on the six previous days.

Charts 4.2 to 4.8 show that price comparisons between capital cities and regional locations are significantly influenced by price cycles in a number of the capital cities over the short term. An example is the price differential between Sydney and regional locations in NSW in May 2020.

Chart 4.9 shows seven-day rolling average retail petrol prices in Canberra from 1 July 2019 to 30 June 2020. There are no prices available for locations in the ACT other than Canberra.

Chart 4.9: Seven-day rolling average petrol prices in Canberra: 1 July 2019 to 30 June 2020

cpl

80

90

100

110

120

130

140

150

160

170

Jul–

19

Au

g–1

9

Sep

–19

Oct

–19

No

v–19

Dec

–19

Jan

–20

Feb

–20

Mar

–20

Ap

r –2

0

May

–20

Jun

–20

Source: ACCC calculations based on data from FUELtrac.

Note: A seven-day rolling average price is the average of the current day’s price and prices on the six previous days.

47 Report on the Australian petroleum market—June 2020

5. International price movementsThe main influences on movements in retail petrol prices in Australia are the international price of refined petrol (which, in turn, is influenced by the price of crude oil) and the AUD–USD exchange rate.

5.1 Crude oil and refined petrolCrude oil prices are an important influence on movements in refined petrol prices around the world. There are a number of international benchmarks used for pricing crude oil, including West Texas Intermediate (WTI), Brent, Tapis and Dubai. The most widely used benchmark in global markets is Brent crude oil.

The relevant international benchmark price for petrol in Australia is the price of refined petrol in the Asia-Pacific region. For RULP, it is Singapore Mogas 95 Unleaded (Mogas 95). This benchmark is used for pricing petrol in Australia due to Australia’s proximity to Singapore, which is one of the world’s most important trading and refining centres.

5.1.1 Price movements over the last two yearsChart 5.1 shows movements in weekly average Brent crude oil and Mogas 95 prices in the two years to June 2020.

Chart 5.1: Weekly average Brent crude oil and Mogas 95 prices: July 2018 to June 2020

0

10

20

30

40

50

60

70

80

90

100

US

D p

er b

l

Brent crude oil Mogas 95

Jul–

18

Oct

–18

Jan

–19

Ap

r–1

9

Jul–

19

Oct

–19

Jan

–20

Ap

r–2

0

Source: ACCC calculations based on data from Argus Media and OPIS.

Weekly average Brent crude oil prices trended upwards in the first three months of this period reaching a high of around USD 84 per barrel in early October 2018, before decreasing sharply, to around USD 52 per barrel by the end of December 2018. They trended upwards in early 2019, to a high of around USD 73 per barrel in April 2019. Prices subsequently decreased and from June 2019 to mid-November 2019 were broadly stable within a USD 7 per barrel band between USD 58 per barrel and USD 65 per barrel. Prices then increased to around USD 70 per barrel at the end of December 2019 before decreasing sharply to around USD 23 per barrel at the end of March 2020.

In the June quarter 2020, weekly average Brent crude oil prices continued to decrease and reached a low of around USD 12 per barrel in late April 2020. Prices were last this low in early March 1999. They then increased steadily to around USD 42 per barrel at the end of June 2020 (an increase of around 185 per cent from the start of the quarter).

48 Report on the Australian petroleum market—June 2020

Weekly average Mogas 95 prices moved in a similar manner to Brent crude oil prices over the two-year period. They reached a peak in October 2018 (at around USD 94 per barrel), and then decreased sharply to around USD 55 per barrel by the end of December 2018. They trended upwards to a high of around USD 83 per barrel by late April 2019. They subsequently decreased to around USD 65 per barrel in early June 2019 and were broadly stable within a USD 10 per barrel band between around USD 65 per barrel and around USD 75 per barrel until the end of December 2019 (when they were around USD 76 per barrel). They then decreased sharply to around USD 22 per barrel at the end of March 2020.

In the June quarter 2020, weekly average Mogas 95 prices decreased to around USD 19 per barrel in late April 2020. Weekly average Mogas 95 prices were last at this level in mid-June 1999. They then increased to around USD 48 per barrel at the end of June 2020 (an increase of around 125 per cent from the start of the quarter).

Brent crude oil and Mogas 95 prices were significantly lower in the June quarter 2020:

� quarterly average Brent crude oil prices were around USD 28 per barrel (a decrease of USD 22 per barrel, or 44 per cent, from the previous quarter)

� quarterly average Mogas 95 prices were around USD 33 per barrel (a decrease of USD 24 per barrel, or 42 per cent).

5.1.2 Influences on crude oil prices Increases in crude oil prices in 2018 were largely influenced by agreements made by the Organisation of the Petroleum Exporting Countries (OPEC) cartel, and some other crude oil producing countries (including Russia), since late 2016 to cut production. The sharp fall in crude oil prices from early October 2018 was due to concerns over a global trade war and increasing US shale oil production.46 Increasing crude oil prices in early 2019 were due to increasing compliance with production cuts among OPEC countries and Russia.47 On 1 July 2019, OPEC announced that it had agreed to extend oil supply cuts until March 2020.48

In mid-September 2019 international crude oil prices increased by over 10 per cent (to around USD 69 per barrel) following an attack on Saudi Arabian crude oil production facilities.49 However, by the end of September 2019, crude oil prices had returned to their pre-attack levels. In December 2019, OPEC and non-OPEC nations agreed to further cuts in crude oil production of 0.5 million barrels per day until 31 March 2020, increasing the agreed cuts from 1.2 million barrels per day to 1.7 million barrels per day.50 Increases in crude oil prices in the December quarter 2019 were also influenced by an attack on an Iranian crude oil tanker in early October 2019, improvements in trade talks between the US and China, and increased demand for oil imports by China.51

The fall in crude oil prices began in mid-January 2020, influenced by the news coming out of China about the COVID-19 outbreak, and its impact on Chinese economic activity. On 30 January 2020, the

46 Reuters, A slippery trade: oil slump proves bears right, 24 November 2018, at: https://www.reuters.com/article/us-marketsoilmajors-bears-graphic/a-slippery-trade-oil-slump-proves-bears-right-idUSKCN1NS1IU, accessed on 20 August 2020.

47 Reuters, OPEC cuts oil supply steeply but sees growing 2019 headwinds, 12 February 2019, at: https://www.reuters.com/article/us-oil-opec-report/opec-cuts-oil-supply-steeply-but-sees-growing-2019-headwinds-idUSKCN1Q11GA, accessed on 20 August 2020.

48 Reuters, OPEC extends oil cut to prop up prices as economy weakens, 1 July 2019, at: https://www.reuters.com/article/us-oil-opec/opec-extends-oil-cut-to-prop-up-prices-as-economy-weakens-idUSKCN1TW1LF, accessed on 20 August 2020.

49 Reuters, Oil jumps nearly 15% in record trading after attack on Saudi facilities, 16 September 2019, at: https://www.reuters.com/article/us-global-oil/oil-jumps-nearly-15-in-record-trading-after-attack-on-saudi-facilities-idUSKBN1W00UG, accessed on 20 August 2020.

50 Organisation of the Petroleum Exporting Countries, The 7th OPEC and non-OPEC Ministerial Meeting concludes, media release, 6 December 2019, at: https://www.opec.org/opec_web/en/press_room/5797.htm, accessed on 20 August 2020.

51 Reuters, Oil rises 2% after reports of Iranian tanker attack, 11 October 2019, at: https://www.reuters.com/article/us-global-oil/oil-jumps-briefly-after-reports-of-iranian-tanker-attack-idUSKBN1WQ02L, CNBC (Consumer News and Business Channel) , Oil prices steady, on track for biggest yearly rise since 2016, 30 December 2019, at: https://www.cnbc.com/2019/12/31/oil-markets-us-china-trade-supply-cuts-in-focus.html, and About energy, Oil Market Review, Monthly review, at: https://www.aboutenergy.com/en_IT/oil-prices.page, accessed on 20 August 2020.

49 Report on the Australian petroleum market—June 2020

World Health Organisation declared the virus a Public Health Emergency of International Concern.52 As countries imposed restrictions on travel and economic activity, demand for crude oil and refined petrol products decreased significantly.

This decrease in demand was compounded by the inability of the OPEC cartel and other crude oil producing countries to agree on further crude oil production cuts at their meeting on 5 March 2020. At that meeting, OPEC proposed a production cut of 1.5 million barrels per day for the second quarter of 2020, of which 1 million barrels per day would come from OPEC countries and 0.5 million barrels per day from non-OPEC producers, most prominently Russia. On 6 March 2020, Russia rejected the proposal and Saudi Arabia (the world’s largest oil exporter) boosted production to its full capacity of 12.3 million barrels per day. Saudi Arabia also announced discounts of almost 20 per cent in key markets. The result was an immediate drop of more than 30 per cent in crude oil prices.53

In April 2020, OPEC, Russia and other crude oil producing countries agreed to cut output by 9.7 million barrels per day in May and June 2020.54 The agreement came as crude oil prices continued to decrease due to falling worldwide consumption resulting from COVID-19 and a 13-month high in OPEC’s oil output in April 2020.55 These production cuts ultimately led to a steady increase in crude oil prices over the rest of the June quarter 2020. It also saw OPEC record its lowest oil output level in June 2020 since at least 2000.56

5.1.3 Refiner marginThe difference between the price of refined petrol and the price of crude oil is referred to as the refiner margin. In the June quarter 2020, the average refiner margin was USD 5.2 per barrel, a decrease of USD 1.3 per barrel from the previous quarter (USD 6.5 per barrel).

In 2019–20, the annual average refiner margin was USD 8.5 per barrel, an increase of USD 1.9 per barrel from 2018–19 (USD 6.6 per barrel).

Although it increased from the previous year, the refiner margin in the second half of 2019–20 was influenced by lower fuel sales resulting from lockdowns and travel restrictions implemented during the COVID-19 pandemic.57

5.1.4 Crude oil prices in the long term As with many commodities, crude oil prices fluctuate greatly. In the short term, market sentiment about economic conditions and geo-political events can drive rapid movements in crude oil prices. Over the medium to longer term, prices are driven by supply and demand factors, with periods of high or low prices lasting several years.

Extended periods of high crude oil prices provide an incentive for producers to invest in exploration and expansion. This leads to an increase in supply, which in turn puts downward pressure on prices. Conversely, when crude oil prices are low, producers tend not to invest, which puts upward pressure on prices, as growth in demand is not met by supply.

52 World Health Organisation, Statement on the second meeting of the International Health Regulations (2005) Emergency Committee regarding the outbreak of novel coronavirus (2019-nCoV), 30 January 2020, at: https://www.who.int/news-room/detail/30-01-2020-statement-on-the-second-meeting-of-the-international-health-regulations-(2005)-emergency-committee-regarding-the-outbreak-of-novel-coronavirus-(2019-ncov), accessed on 20 August 2020.

53 The World Bank, Coping with a Dual Shock: COVID-19 and Oil Prices, Brief, 14 April 2020, at: https://www.worldbank.org/en/region/mena/brief/coping-with-a-dual-shock-coronavirus-covid-19-and-oil-prices, accessed on 20 August 2020.

54 Reuters, Oil mixed as demand worries offset gains from output cut deal, 13 April 2020, at: https://www.reuters.com/article/us-global-oil/oil-futures-little-changed-despite-record-output-cut-by-opec-idUSKCN21U0WQ?feedType=mktg&feedName=ousivMolt&WT.mc_id=Partner-Google, accessed on 20 August 2020.

55 Reuters, OPEC April oil output surges to 13-month high before new cut deal, 1 May 2020, at: https://www.reuters.com/article/oil-opec-survey/opec-april-oil-output-surges-to-13-month-high-before-new-cut-deal-idUSL8N2CI8JG, accessed on 20 August 2020.

56 Reuters, OPEC oil output sinks as Saudi deepens cuts and others cut more, survey shows, 1 July 2020, at: https://www.reuters.com/article/us-oil-opec-survey/opec-oil-output-sinks-as-saudi-deepens-cuts-and-others-cut-more-survey-shows-idUSKBN2412C3, accessed on 20 August 2020.

57 Yahoo! Finance, Refining May Fail to Save Low Crude Price-Hit Big Oil in Q2, 23 July 2020, at: https://finance.yahoo.com/news/refining-may-fail-save-low-131401430.html, accessed on 20 August 2020.

50 Report on the Australian petroleum market—June 2020

On 20 April 2020, WTI crude oil prices fell below USD 0 per barrel for the first time in history, when it reached minus USD 37.63 per barrel.58 This was driven in part by a technicality of the global oil market. Oil is traded on its future price and May 2020 futures contracts were due to expire on the following day. Traders were keen to offload holdings to avoid having to take delivery of the oil and incur storage costs. WTI crude oil prices were positive the following day.

Chart 5.2 shows that, over the 40 years to June 2020, WTI crude oil prices in real terms were on average around USD 61 per barrel. In the June quarter 2020, real WTI crude oil prices were on average around USD 28 per barrel, which was USD 18 per barrel lower than the March quarter 2020 (USD 46 per barrel) and USD 33 per barrel lower than the 40-year average.

Chart 5.2: Monthly average real WTI crude oil prices: July 1980 to June 2020

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

US

D p

er b

l

WTI 40-year average

0

20

40

60

80

100

120

140

160

180

2020

Source: ACCC calculations based on data used with permission from The Wall Street Journal, WSJ.com, Copyright 2015 Dow Jones & Company, Inc. All rights reserved, Reuters and U.S. Department of Labor, Bureau of Labor Statistics, Consumer Price Index for all urban consumers, at: https://dlt.ri.gov/documents/pdf/lmi/cpi.pdf, accessed on 20 August 2020.

Note: Real prices are shown in June 2020 dollars.

5.2 AUD–USD exchange rateThe AUD–USD exchange rate is a significant determinant of Australia’s retail petrol prices, because international refined petrol is bought and sold in US dollars in global markets.

Chart 5.3 shows that in the two years to June 2020, the AUD–USD exchange rate trended downwards for much of the period before increasing from late March 2020. It decreased from a high of US 75 cents in July 2018 to a low of US 56 cents in late March 2020. The exchange rate increased during the June quarter 2020, ending the quarter at around US 69 cents. The average AUD–USD exchange rate during the two-year period was US 69 cents.

58 BBC News, US oil prices turn negative as demand dries up, 21 April 2020, at: https://www.bbc.com/news/business-52350082, accessed on 20 August 2020.

51 Report on the Australian petroleum market—June 2020

Chart 5.3: Daily AUD–USD exchange rates: 1 July 2018 to 30 June 2020U

S ce

nts

54

59

64

69

74

79

Jul–

18

Oct

–18

Jan

–19

Ap

r–19

Jul–

19

Oct

–19

Jan

–20

Ap

r–20

Source: RBA.

Note: Exchange rates are the daily RBA 4.00 pm closing rates. See: http://www.rba.gov.au/statistics/frequency/exchange-rates.html.

In the June quarter 2020, the average AUD–USD exchange rate was US 65.71 cents, which was US 0.13 cents lower than in the March quarter 2020. The AUD–USD exchange rate in the June quarter 2020 was the lowest in 17 years (since the June quarter 2003).

Had the AUD–USD exchange rate remained at the July 2018 high of US 75 cents, average retail petrol prices in the June quarter 2020 in Australia would have been around 4.0 cpl lower (everything else being equal).

The annual average AUD–USD exchange rate in 2019–20 was USD 67 cents, which was around USD 5 cents lower than in 2018–19 (US 72 cents), and was the lowest annual average AUD–USD exchange rate in 17 years (since 2002–03).

52 Report on the Australian petroleum market—June 2020

6. Diesel and automotive LPG prices

6.1 Diesel price movementsQuarterly average retail diesel prices in the five largest cities were 122.1 cpl in the June quarter 2020, a decrease of 24.7 cpl from the March quarter 2020 (146.8 cpl).

The appropriate international benchmark price for diesel is the price of Singapore Gasoil with 10 parts per million sulphur content (Gasoil 10 ppm). International demand for diesel is different from that for petrol, in part because of diesel’s off-road, industrial and electricity generation uses. However, both petrol and diesel are refined from crude oil and their prices broadly tend to follow similar movements over the long term.

Chart 6.1 shows that seven-day rolling average retail diesel prices in the five largest cities broadly tracked Gasoil 10 ppm prices over the year to 30 June 2020.

Chart 6.1: Seven-day rolling average retail diesel prices in the five largest cities and Gasoil 10 ppm prices: 1 July 2019 to 30 June 2020

cpl

cpl

Retail prices (LHS) Gasoil 10 ppm (lagged 11 days) (RHS)

15

25

35

45

55

65

75

85

95

85

95

105

115

125

135

145

155

165

Jul–

19

Aug

–19

Sep–

19

Oct

–19

Nov

–19

Dec

–19

Jan–

20

Feb–

20

Mar

–20

Apr

–20

May

–20

Jun–

20

Source: ACCC calculations based on data from FUELtrac, Argus Media, OPIS and RBA.

Note: Gasoil 10 ppm prices are lagged by 11 days as there is generally around a one- to two-week lag between changes in international prices and changes in retail prices in the five largest cities.

Seven-day rolling average retail diesel prices were 134.8 cpl at the beginning of the June quarter 2020. After decreasing in the previous quarter, prices continued decreasing and reached a low of 118.1 cpl at the end of May 2020, before increasing slightly in June 2020 to end the quarter at 119.6 cpl.

Gasoil 10 ppm prices in Australian cents per litre were 42.9 cpl at the beginning of the quarter. Prices continued to decrease until early May 2020 when they reached a low of 25.1 cpl. They subsequently increased for the remainder of the quarter to 43.2 cpl.

Quarterly average Gasoil 10 ppm prices in the June quarter 2020 in Australian cents per litre were 36.3 cpl, a decrease of 22.7 cpl from the March quarter 2020 (59.0 cpl).

Unlike petrol prices, diesel prices in the five largest cities do not move in cycles. Diesel prices may not have price cycles because a large proportion of sales are to commercial users who purchase diesel on a contractual basis. According to the AIP, only around 25 per cent of the diesel used in Australia is

53 Report on the Australian petroleum market—June 2020

sold through retail outlets, and much of that is sold to account customers with very little sold to private customers.59

6.2 Components of diesel prices in 2019–20In 2019–20, the annual average retail price of diesel in the five largest cities was 141.8 cpl, a decrease of 10.0 cpl from 2018–19 (151.8 cpl).

Chart 6.2 shows that the international price of refined diesel (Gasoil 10ppm) accounted for 42 per cent of the average pump price of diesel in 2019–20. This was six percentage points lower than in 2018–19 (48 per cent). The proportion of the average pump price represented by other costs and margins in 2019–20 (19 per cent) was higher than in 2018–19 (16 per cent).

The rate of excise on diesel increased by 0.7 cpl in 2019–20. Taxes accounted for an average of 39 per cent of the diesel pump price in 2019–20, three percentage points higher than in 2018–19 (36 per cent).

Chart 6.2: Components of the annual average retail diesel price in the five largest cities in 2019–20

Gasoil 10 ppm Taxes Other costs and margins

DIESEL141.8 cpl

cpl %

27.4 19

54.9 39

59.5 42

Source: ACCC calculations based on data from FUELtrac, Argus Media, OPIS, RBA and ATO.

6.3 Automotive LPG price movementsQuarterly average retail automotive LPG prices in the five largest cities in the June quarter 2020 were 78.6 cpl, a decrease of 7.1 cpl from the March 2020 quarter (85.7 cpl).

The appropriate international benchmarks for automotive LPG prices are the Saudi Aramco Contract Prices for propane and butane (Saudi CP). These prices only change once a month, at the start of each month. International LPG prices loosely move in line with international refined petrol and diesel prices.

Seven-day rolling average retail automotive LPG prices were 84.2 cpl at the beginning of the June quarter 2020 (see chart 6.3). They decreased to a low of 77.0 cpl in early June 2020 and remained around that level, ending the quarter at 77.4 cpl.

The Saudi CP benchmarks were 20.6 cpl at the beginning of the June quarter 2020, which was 16.7 cpl lower than in March 2020 (37.3 cpl). The benchmark prices increased to 29.5 cpl in May 2020 and then decreased marginally to 28.5 cpl in June 2020.

59 Australian Institute of Petroleum, Facts about diesel prices & the Australian fuel market, at: https://www.aip.com.au/sites/default/files/download-files/2020-02/Facts%20about%20Diesel%20Prices%20and%20the%20Australian%20Fuel%20Market.pdf, accessed on 20 August 2020.

54 Report on the Australian petroleum market—June 2020

Chart 6.3: Seven-day rolling average retail automotive LPG prices in the five largest cities and monthly Saudi CP benchmarks: 1 July 2019 to 30 June 2020

cpl

cpl

Retail prices (LHS) Saudi CP (RHS)

5

15

25

35

45

55

65

35

45

55

65

75

85

95Ju

l–19

Au

g–1

9

Sep

–19

Oct

–19

No

v–19

Dec

–19

Jan

–20

Feb

–20

Mar

–20

Ap

r–20

May

–20

Jun

–20

Source: ACCC calculations based on data from FUELtrac, Gas Energy Australia, Reuters and RBA,

Chart 6.3 shows that overall automotive LPG retail prices were not as responsive, both up and down, to movements in Saudi CP benchmark prices in the year to 30 June 2020.

As the Saudi CP benchmarks only change at the start of each month, the relationship between movements in the international benchmark prices and retail prices for automotive LPG is different from petrol and diesel. Furthermore, international LPG prices are influenced by non-transport factors, such as demand for heating, particularly in the Northern Hemisphere.

Like diesel prices, retail automotive LPG prices tend to be less volatile than petrol prices and do not move in cycles. Automotive LPG usage in Australia is significantly less than petrol and diesel usage, and there are fewer retailers of automotive LPG, particularly outside Victoria (where around half of Australia’s automotive LPG is sold).

6.4 Components of automotive LPG prices in 2019–20In 2019–20, the annual average retail price of automotive LPG in the five largest cities was 80.7 cpl, a decrease of 3.7 cpl from 2018–19 (84.4 cpl).

Chart 6.4 shows that the Saudi CP benchmarks accounted for 41 per cent of the pump price of automotive LPG in 2019–20. This was six percentage points lower than in 2018–19 (47 per cent). Other costs and margins accounted for 33 per cent of the average pump price in 2019–20, which was five percentage points higher than in 2018–19 (28 per cent). Other costs and margins make up a relatively large proportion of the retail price for automotive LPG compared with those for petrol and diesel because of the higher transportation and storage costs for automotive LPG, and the lower rate of excise.

The rate of excise on automotive LPG increased by 0.2 cpl in 2019–20. Taxes accounted for 26 per cent of the average pump price of automotive LPG in 2019–20, which was one percentage point higher than in 2018–19 (25 per cent).

55 Report on the Australian petroleum market—June 2020

Chart 6.4: Components of the annual average retail automotive LPG price in the five largest cities in 2019–20

Saudi CP Taxes Other costs and margins

LPG80.7 cpl

cpl %

26.7 33

21.1 26

32.9 41

Source: ACCC calculations based on data from FUELtrac, Gas Energy Australia, Reuters, RBA and ATO.

56 Report on the Australian petroleum market—June 2020

Appendix A: Petrol price cycles and GIRDs in Sydney, Melbourne and Adelaide in 2019–20Chapter 3 noted that the shape of the petrol price cycle in the five largest cities changed in March 2020 when TGPs decreased sharply. In Sydney, Melbourne, Brisbane and Adelaide, the price cycle became longer in duration and did not get as close to TGPs as they had previously at the trough price. In Perth, while regular weekly price cycles continued, they also did not get as close to TGPs as they had previously at the trough price.

Chapter 3 included charts showing daily average retail petrol prices, TGPs and GIRDs in Brisbane and Perth. Charts A1 to A3 show daily average retail petrol prices, TGPs and GIRDs in Sydney, Melbourne and Adelaide respectively in 2019-20.

Chart A.1: Daily average retail petrol prices, TGPs and GIRDs in Sydney: 2019–20

-10

10

30

50

70

90

110

130

150

170

190

cpl

Jul–

19

Au

g–1

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Sep

–19

Oct

–19

No

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Dec

–19

Jan

–20

Feb

–20

Mar

–20

Ap

r–20

May

–20

Jun

–20

GIRDRetail price TGP

Source: ACCC calculations based on data from FUELtrac, BP, Caltex, Mobil and Viva Energy.

57 Report on the Australian petroleum market—June 2020

Chart A.2: Daily average retail petrol prices, TGPs and GIRDs in Melbourne: 2019–20

-10

10

30

50

70

90

110

130

150

170

190

cpl

Jul–

19

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Dec

–19

Jan

–20

Feb

–20

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–20

Ap

r–20

May

–20

Jun

–20

GIRDRetail price TGP

Source: ACCC calculations based on data from FUELtrac, BP, Caltex, Mobil and Viva Energy.

Chart A.3: Daily average retail petrol prices, TGPs and GIRDs in Adelaide: 2019–20

-10

10

30

50

70

90

110

130

150

170

190

cpl

Jul–

19

Au

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Sep

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Dec

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Feb

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May

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Jun

–20

GIRDRetail price TGP

Source: ACCC calculations based on data from FUELtrac, BP, Caltex, Mobil and Viva Energy.

58 Report on the Australian petroleum market—June 2020

Appendix B: Petrol price data for monitored locationsThe ACCC monitors fuel prices in all capital cities and over 190 regional locations across Australia. Table B1 shows monthly average retail petrol prices for March 2020 and June 2020, and the change in price between the two months.60 The table also shows the differential between average petrol prices in the five largest cities and each regional location in the month of June 2020 and financial year 2019–20.61

Table B1: Monthly average petrol prices in March 2020 and June 2020, and city-country differentials in the month of June 2020 and 2019–20—cpl

Location March 2020 June 2020 Change March 2020 to

June 2020

Differential June 2020

Differential 2019–20

Sydney 127.9 117.5 -10.4

Melbourne 126.5 119.3 -7.2

Brisbane 129.3 122.5 -6.8

Adelaide 113.0 118.2 5.2

Perth 123.6 114.7 -8.9

Five largest cities 124.1 118.4 -5.7

Hobart 150.4 122.0 -28.4 3.6 13.2

Canberra 142.1 115.5 -26.6 -2.9 4.2

Darwin 132.1 111.8 -20.3 -6.6 -0.8

New South Wales          

Albury 131.4 117.0 -14.4 -1.4 -0.7

Armidale 143.1 114.7 -28.4 -3.7 4.7

Ballina 145.5 121.8 -23.7 3.4 8.3

Batemans Bay 147.9 118.5 -29.4 0.1 8.0

Bathurst 129.5 117.5 -12.0 -0.9 -5.0

Bega 148.9 129.9 -19.0 11.5 11.1

Broken Hill 144.3 125.2 -19.1 6.8 9.4

Bulahdelah 143.0 119.5 -23.5 1.1 5.0

Casino 135.6 114.2 -21.4 -4.2 2.0

Central Coast 129.1 121.4 -7.7 3.0 3.0

Coffs Harbour 141.4 115.3 -26.1 -3.1 4.8

Cooma 145.4 119.4 -26.0 1.0 9.1

Coonabarabran 139.9 112.8 -27.1 -5.6 5.4

Cootamundra 140.6 122.9 -17.7 4.5 5.7

Cowra 140.7 119.3 -21.4 0.9 5.3

Deniliquin 146.7 122.5 -24.2 4.1 9.9

Dubbo 140.8 116.2 -24.6 -2.2 3.9

Forbes 143.7 125.1 -18.6 6.7 5.5

60 For a price to be included in the table there had to be a price observation on at least 75 per cent of days in the month/year. Fifteen locations—Buronga, Gundagai, Oberon, Woolgoolga, Tennant Creek, Blackall, Charleville, Cloncurry, Cunnamulla, Mt Isa, Normanton, Weipa, Coober Pedy, Queenstown, Corryong—did not have sufficient data for March 2020 and/or June 2020. E10 prices instead of RULP prices are reported in Sydney, Bulahdelah, Coonabarabran, Cowra, Gilgandra, Gunnedah, Ulladulla, Wellington and West Wyalong.

61 The source for all prices in this appendix is ACCC calculations based on data from FUELtrac.

59 Report on the Australian petroleum market—June 2020

Location March 2020 June 2020 Change March 2020 to

June 2020

Differential June 2020

Differential 2019–20

Forster 141.5 119.0 -22.5 0.6 6.8

Gilgandra 140.1 113.4 -26.7 -5.0 3.2

Glen Innes 142.9 123.6 -19.3 5.2 3.8

Goulburn 131.6 111.1 -20.5 -7.3 -2.8

Grafton 139.4 114.0 -25.4 -4.4 3.0

Griffith 138.6 112.7 -25.9 -5.7 2.0

Gunnedah 134.2 113.4 -20.8 -5.0 -1.6

Hay 145.1 117.9 -27.2 -0.5 6.9

Inverell 140.4 116.9 -23.5 -1.5 4.7

Jerilderie 147.3 119.9 -27.4 1.5 9.4

Kempsey 140.7 112.1 -28.6 -6.3 0.4

Leeton 141.6 117.7 -23.9 -0.7 4.0

Lismore 143.6 116.7 -26.9 -1.7 5.6

Lithgow 132.5 108.2 -24.3 -10.2 -0.9

Merimbula 142.6 116.7 -25.9 -1.7 3.3

Mittagong 137.8 117.7 -20.1 -0.7 5.8

Moama 141.4 111.9 -29.5 -6.5 0.5

Moree 141.8 115.0 -26.8 -3.4 4.3

Moruya 131.9 107.2 -24.7 -11.2 -4.4

Moss Vale 139.4 114.7 -24.7 -3.7 3.5

Mudgee 146.9 115.4 -31.5 -3.0 7.2

Murwillumbah 145.2 121.9 -23.3 3.5 13.8

Muswellbrook 133.2 112.0 -21.2 -6.4 -1.9

Narrabri 137.2 118.1 -19.1 -0.3 4.8

Newcastle 125.4 122.0 -3.4 3.6 2.6

Nowra 132.3 107.4 -24.9 -11.0 -2.5

Nyngan 141.3 115.4 -25.9 -3.0 3.4

Orange 131.3 118.3 -13.0 -0.1 -2.7

Parkes 145.4 129.1 -16.3 10.7 8.5

Port Macquarie 143.7 120.8 -22.9 2.4 8.7

Queanbeyan 134.8 113.8 -21.0 -4.6 1.5

Singleton 131.0 121.2 -9.8 2.8 -2.6

Tamworth 129.9 110.3 -19.6 -8.1 -2.5

Taree 141.0 118.5 -22.5 0.1 3.8

Temora 147.8 123.8 -24.0 5.4 8.5

Tumut 142.1 123.3 -18.8 4.9 7.4

Tweed Heads South 117.7 124.4 6.7 6.0 1.3

Ulladulla 142.9 117.7 -25.2 -0.7 3.3

Wagga Wagga 140.5 116.8 -23.7 -1.6 4.4

Wauchope 138.4 117.0 -21.4 -1.4 6.4

Wellington 137.8 113.2 -24.6 -5.2 0.0

West Wyalong 145.2 111.8 -33.4 -6.6 5.1

Wollongong 138.7 125.4 -13.3 7.0 7.4

60 Report on the Australian petroleum market—June 2020

Location March 2020 June 2020 Change March 2020 to

June 2020

Differential June 2020

Differential 2019–20

Yass 141.3 114.7 -26.6 -3.7 4.5

Northern Territory          

Alice Springs 151.9 128.9 -23.0 10.5 16.9

Katherine 139.7 118.6 -21.1 0.2 4.9

Queensland          

Atherton 146.4 114.2 -32.2 -4.2 6.0

Ayr 135.5 113.6 -21.9 -4.8 -1.1

Biloela 145.2 119.9 -25.3 1.5 8.3

Blackwater 150.8 114.1 -36.7 -4.3 13.3

Bowen 137.0 115.3 -21.7 -3.1 1.7

Bundaberg 127.9 109.0 -18.9 -9.4 -5.6

Caboolture 129.9 123.1 -6.8 4.7 2.3

Cairns 139.3 117.0 -22.3 -1.4 2.1

Charters Towers 145.7 118.0 -27.7 -0.4 6.3

Childers 132.5 115.7 -16.8 -2.7 1.2

Dalby 138.3 117.5 -20.8 -0.9 0.4

Emerald 145.1 133.8 -11.3 15.4 11.1

Gladstone 129.3 112.8 -16.5 -5.6 -3.1

Gold Coast 126.4 118.8 -7.6 0.4 0.1

Goondiwindi 131.9 108.1 -23.8 -10.3 -4.4

Gympie 125.8 113.6 -12.2 -4.8 -4.6

Hervey Bay 134.2 116.6 -17.6 -1.8 -0.6

Ingham 135.1 115.6 -19.5 -2.8 4.3

Innisfail 142.3 114.3 -28.0 -4.1 2.5

Ipswich 128.4 122.4 -6.0 4.0 0.7

Kingaroy 137.3 107.0 -30.3 -11.4 -1.5

Longreach 148.5 132.1 -16.4 13.7 15.6

Mackay 140.2 116.3 -23.9 -2.1 2.7

Mareeba 147.2 124.3 -22.9 5.9 8.2

Maryborough 124.7 113.2 -11.5 -5.2 -3.8

Miles 131.0 105.7 -25.3 -12.7 -5.6

Moranbah 142.5 108.2 -34.3 -10.2 0.9

Rockhampton 140.2 116.1 -24.1 -2.3 2.4

Roma 130.6 116.9 -13.7 -1.5 -2.6

Sunshine Coast 128.6 115.6 -13.0 -2.8 -0.3

Toowoomba 123.9 120.9 -3.0 2.5 -3.3

Townsville 135.7 116.0 -19.7 -2.4 0.1

Tully 145.1 110.8 -34.3 -7.6 5.2

Warwick 137.2 122.4 -14.8 4.0 0.0

Whitsunday 130.7 108.7 -22.0 -9.7 -5.7

Yeppoon 143.2 115.2 -28.0 -3.2 3.0

61 Report on the Australian petroleum market—June 2020

Location March 2020 June 2020 Change March 2020 to

June 2020

Differential June 2020

Differential 2019–20

South Australia          

Bordertown 138.4 112.7 -25.7 -5.7 3.5

Ceduna 140.1 120.8 -19.3 2.4 7.1

Clare 129.8 108.1 -21.7 -10.3 -2.5

Gawler 113.4 119.5 6.1 1.1 3.6

Kadina 129.8 114.0 -15.8 -4.4 -1.3

Keith 140.0 113.8 -26.2 -4.6 5.1

Loxton 135.0 112.4 -22.6 -6.0 0.6

Mt Gambier 130.4 115.3 -15.1 -3.1 -0.5

Murray Bridge 129.7 113.5 -16.2 -4.9 -2.2

Naracoorte 142.3 116.4 -25.9 -2.0 5.1

Port Augusta 144.3 115.6 -28.7 -2.8 7.1

Port Lincoln 135.1 115.5 -19.6 -2.9 3.5

Port Pirie 131.4 112.3 -19.1 -6.1 -1.6

Renmark 136.5 117.2 -19.3 -1.2 3.5

Tailem Bend 135.5 113.1 -22.4 -5.3 3.2

Victor Harbour 138.5 115.2 -23.3 -3.2 5.0

Whyalla 135.2 115.9 -19.3 -2.5 2.0

Tasmania          

Burnie 146.9 119.5 -27.4 1.1 9.3

Campbell Town 151.0 120.8 -30.2 2.4 12.1

Devonport 146.7 120.4 -26.3 2.0 10.7

Huonville 149.6 119.8 -29.8 1.4 9.2

Launceston 151.7 123.7 -28.0 5.3 14.0

New Norfolk 152.1 122.1 -30.0 3.7 13.1

Smithton 141.2 118.6 -22.6 0.2 7.9

Sorell 150.9 120.2 -30.7 1.8 11.6

Ulverstone 147.9 120.8 -27.1 2.4 10.6

Wynyard 151.9 121.1 -30.8 2.7 10.3

Victoria          

Ararat 139.8 114.0 -25.8 -4.4 3.9

Bairnsdale 136.1 109.6 -26.5 -8.8 -2.4

Ballarat 127.3 109.3 -18.0 -9.1 -6.1

Benalla 140.7 113.1 -27.6 -5.3 1.4

Bendigo 130.0 112.7 -17.3 -5.7 -1.1

Cobram 141.7 116.2 -25.5 -2.2 4.4

Colac 134.6 107.9 -26.7 -10.5 -2.1

Echuca 140.5 112.1 -28.4 -6.3 0.4

Euroa 146.0 114.6 -31.4 -3.8 7.0

Geelong 121.6 115.0 -6.6 -3.4 -4.0

Hamilton 129.0 109.3 -19.7 -9.1 -1.1

Horsham 138.3 115.2 -23.1 -3.2 3.6

Koo Wee Rup 132.0 125.4 -6.6 7.0 2.7

62 Report on the Australian petroleum market—June 2020

Location March 2020 June 2020 Change March 2020 to

June 2020

Differential June 2020

Differential 2019–20

Kyabram 139.8 114.3 -25.5 -4.1 4.6

Lakes Entrance 142.6 113.1 -29.5 -5.3 0.6

Leongatha 127.8 110.7 -17.1 -7.7 -4.1

Mansfield 131.9 114.5 -17.4 -3.9 4.3

Mildura 137.5 112.8 -24.7 -5.6 3.1

Moe 136.7 109.0 -27.7 -9.4 -1.4

Morwell 135.2 108.6 -26.6 -9.8 -3.3

Portland 122.4 108.5 -13.9 -9.9 -6.2

Sale 144.8 115.8 -29.0 -2.6 5.1

Seymour 129.4 117.7 -11.7 -0.7 3.6

Shepparton 129.1 114.9 -14.2 -3.5 -0.4

Swan Hill 141.9 117.9 -24.0 -0.5 6.7

Traralgon 132.7 112.2 -20.5 -6.2 -0.8

Wallan 125.4 117.4 -8.0 -1.0 1.2

Wangaratta 135.6 113.6 -22.0 -4.8 -0.2

Warrnambool 140.1 107.0 -33.1 -11.4 0.7

Wodonga 132.3 112.2 -20.1 -6.2 -0.2

Wonthaggi 134.4 112.0 -22.4 -6.4 1.5

Yarrawonga 145.5 114.4 -31.1 -4.0 5.4

Western Australia          

Albany 130.3 108.4 -21.9 -10.0 -2.2

Boulder 149.4 123.9 -25.5 5.5 10.7

Bridgetown 139.3 121.3 -18.0 2.9 6.5

Broome 156.7 136.1 -20.6 17.7 21.7

Bunbury 137.6 119.6 -18.0 1.2 3.3

Busselton 137.6 117.4 -20.2 -1.0 2.9

Carnarvon 153.0 123.3 -29.7 4.9 13.8

Collie 139.9 105.5 -34.4 -12.9 1.0

Dongara 146.2 124.7 -21.5 6.3 9.9

Esperance 150.3 125.3 -25.0 6.9 12.1

Eucla 152.1 133.3 -18.8 14.9 22.4

Geraldton 142.4 124.7 -17.7 6.3 7.2

Kalgoorlie 148.4 123.7 -24.7 5.3 10.6

Karratha 161.2 139.8 -21.4 21.4 22.9

Manjimup 137.3 119.9 -17.4 1.5 2.9

Mount Barker 130.9 108.1 -22.8 -10.3 -1.7

Port Hedland 160.6 136.8 -23.8 18.4 20.9

Waroona 124.5 113.0 -11.5 -5.4 -2.5

63 Report on the Australian petroleum market—June 2020

Appendix C: Update on regional market studiesThe ACCC undertook four regional petrol market studies between 2015 and 2017. These studies examined petrol markets in Darwin, Launceston, Armidale and Cairns. Following the completion of those studies, the ACCC continues to monitor prices and developments in those locations to assess changes in competition over time.

Table C1 shows average retail petrol prices and GIRDs for each location, and a comparison with those in the five largest cities, in the June quarter 2020 and financial year 2019–20.

Table C1: Quarterly and annual average retail petrol prices and GIRDs in Darwin, Launceston, Armidale, Cairns and the five largest cities—June quarter 2020 and 2019–20—cpl

Darwin Launceston Armidale Cairns Five largest cities

June quarter 2020

Retail prices

Ave price: June quarter 2020 116.0 125.4 115.5 116.2 109.0

Change from March quarter 2020 -20.1 -30.4 -29.0 -27.9 -28.8

Difference from five largest cities: June quarter 2020

7.0 16.4 6.5 7.2 -

Change from March quarter 2020 8.7 -1.6 -0.2 0.9 -

GIRDs

Ave GIRDs: June quarter 2020 19.4 26.7 20.9 19.7 15.9

Change from March quarter 2020 9.2 -2.4 -2.3 1.2 -0.3

Difference from five largest cities: June quarter 2020

3.5 10.8 5.0 3.8 -

Change from March quarter 2020 9.5 -2.1 -2.0 1.5 -

2019–20

Retail prices

Ave price: 2019–20 133.8 148.6 137.5 136.7 134.6

Change from 2018–19 -11.6 -7.6 -10.0 -11.4 -6.6

Difference from five largest cities: 2019–20 -0.8 14.0 2.9 2.1 -

Change from 2018–19 -5.0 -1.0 -3.4 -4.8 -

GIRDs

Ave GIRDs: 2019–20 9.8 23.2 17.7 12.9 14.7

Change from 2018–19 -1.8 1.8 -1.7 -2.2 2.7

Difference from five largest cities: 2019–20 -4.9 8.5 3.0 -1.8 -

Change from 2018–19 -4.5 -0.9 -4.4 -4.9 -

Source: ACCC calculations based on data fron FUELtrac, BP, Caltex, Mobil, Viva Energy and WA FuelWatch.

Notes: All prices are for RULP except Armidale (which is E10).

Hobart TGPs are used as a proxy for TGPs in Launceston.

Sydney and Brisbane E10 TGPs are used as a proxy for Armidale TGPs.

64 Report on the Australian petroleum market—June 2020

DarwinThe ACCC’s report on the Darwin petrol market was released in November 2015.62 It found that the increase in retail petrol margins in Darwin in 2012–13 and 2013–14 had imposed a significant cost on motorists. The report noted that higher prices and profits in Darwin were the result of weak retail competition.

Darwin petrol prices decreased in the June quarter 2020Chart C1 shows quarterly average retail petrol prices in Darwin and the five largest cities over a three-year period from the September quarter 2017 to the June quarter 2020.

Chart C1: Quarterly average retail petrol prices in Darwin and the five largest cities: September quarter 2017 to June quarter 2020

100

110

120

130

140

150

160

170

cpl

Darwin Five largest cities

Sep–

17

De

c–1

7

Mar

–18

Jun–

18

Sep–

18

De

c–1

8

Mar

–19

Jun–

19

Sep–

19

De

c–1

9

Mar

–20

Jun–

20

Source: ACCC calculations based on data from FUELtrac.

In the June quarter 2020, average retail prices in Darwin were 116.0 cpl, a decrease of 20.1 cpl from the March quarter 2020 (136.1 cpl). This was less than the decrease in the five largest cities (28.8 cpl).

The quarterly average price in Darwin in the June quarter 2020 was 7.0 cpl higher than the five largest cities, an increase of 8.7 cpl in the differential between the two from the March quarter 2020 (when the Darwin average price was 1.7 cpl lower than the five largest cities).

The market study noted that the average differential between prices in Darwin and the five largest cities in 2012–13 and 2013–14 was over 19.0 cpl. Since then it has decreased significantly.

In 2019–20, the annual average retail price in Darwin was 133.8 cpl, a decrease of 11.6 cpl from 2018–19 (145.4 cpl). The annual average price in Darwin in 2019–20 was 0.8 cpl lower than prices in the five largest cities. This was a decrease of 5.0 cpl in the annual differential between Darwin and the five largest cities from 2018–19, when the annual average price in Darwin was 4.2 cpl higher than prices in the five largest cities.

Darwin prices remained below a long-term competitive cost-based priceThe ACCC’s 2015 Darwin report noted that motorists were paying around 10.0 cpl more than they should have been in a competitive market. This was based on a comparison of GIRDs in Darwin with those in the larger capital cities.

62 ACCC, Report on the Darwin petrol market, 23 November 2015, at: https://www.accc.gov.au/publications/petrol-market-studies/report-on-the-darwin-petrol-market.

65 Report on the Australian petroleum market—June 2020

Chart C2 shows Darwin petrol prices on a rolling annual average basis from 1 January 2015 to 30 June 2020. Each daily price in the chart is the average of that day’s price and prices on the previous 364 days. Analysis of prices over the long term enables short-term influences (such as lags in regional price movements) to be smoothed out.

The chart also shows estimated Darwin prices calculated on a long-term cost basis. This calculation reflects the fact that costs (such as freight and operating costs on a per litre basis) are higher in Darwin, and assumes that retail margins in Darwin should be broadly similar to long-term average retail margins in the five largest cities. This long-term competitive cost-based price provides a benchmark against which to compare current price levels. It is not static and will change as its underlying elements change over time. If retail prices are constantly above this benchmark price for a sustained period this may be indicative of a less-competitive market, in which retailers are earning higher margins at the expense of consumers.

Chart C2: Rolling annual average retail prices and a long-term competitive cost-based price in Darwin, and the difference: 1 January 2015 to 30 June 2020

-10

0

10

20

30

40

50

60

70

100

110

120

130

140

150

160

170

180

cpl

cpl ACCC report released 23 November 2015

ACCC announces Darwin market study 10 March 2015

Di�erence (RHS) Retail price (LHS) Competitive cost-based price (LHS)

Jan–

15

Apr

–15

Jul–

15

Oct

–15

Jan–

16

Apr

–16

Jul–

16

Oct

–16

Jan–

17

Apr

–17

Jul–

17

Oct

–17

Jan–

18

Apr

–18

Jul–

18

Oct

–18

Jan–

19

Apr

–19

Jul–

19

Oct

–19

Jan–

20

Apr

–20

Source: ACCC calculations based on data from FUELtrac, Informed Sources and the companies that participated in the Darwin market study.

Notes: A rolling annual average price is the average of that day’s price and prices on the previous 364 days.

A long-term competitive cost-based price assumes that retail margins in Darwin should be broadly similar to long-term average retail margins in the five largest cities.

The chart indicates that rolling annual average petrol prices in Darwin in the June quarter 2020 remained below a competitive cost-based price, as they have been since around mid-2019.

As noted in the ACCC’s Report on the Australian petroleum market—September quarter 2019, the relatively low retail prices in Darwin in recent quarters may have been influenced by:63

� the opening of a second FuelXpress retail site in Palmerston in August 2019

� the change in price setter at Coles Express retail sites from 1 March 2019.

Motorists in Darwin may have become more aware of these changes in pricing behaviour in the Darwin market through information available from the fuel price transparency scheme in the Northern Territory (MyFuel NT).

63 ACCC, Report on the Australian petroleum market—September quarter 2019, p. 2, at: https://www.accc.gov.au/publications/quarterly-reports-on-the-australian-petroleum-industry/quarterly-report-on-the-australian-petroleum-market-september-quarter-2019.

66 Report on the Australian petroleum market—June 2020

Darwin GIRDs increased in the June quarter 2020Chart C3 shows quarterly average GIRDs in Darwin and the five largest cities from the September quarter 2017 to the June quarter 2020. GIRDs in Darwin have decreased in recent years since the peak of 30.6 cpl in the September quarter 2014.

Chart C3: Quarterly average petrol GIRDs in Darwin and the five largest cities: September quarter 2017 to June quarter 2020

0

5

10

15

20

25

30

cpl

Darwin Five largest cities

Sep

–17

Dec

–17

Mar

–18

Jun

–18

Sep

–18

Dec

–18

Mar

–19

Jun

–19

Sep

–19

Dec

–19

Mar

–20

Jun

–20

Source: ACCC calculations based on data from FUELtrac, AIP, BP, Caltex, Mobil, Viva Energy and FuelWatch.

In the June quarter 2020, Darwin GIRDs were 19.4 cpl, an increase of 9.2 cpl from the March quarter 2020 (10.2 cpl). Darwin GIRDs in the June quarter 2020 were 3.5 cpl higher than the five largest cities (15.9 cpl), after five consecutive quarters in which quarterly average Darwin GIRDs were lower than GIRDs in the five largest cities.

In 2019–20, annual average GIRDs in Darwin were 9.8 cpl, a decrease of 1.8 cpl from 2018–19 (11.6 cpl). Darwin annual average GIRDs in 2019–20 were 4.9 cpl lower than GIRDs in the five largest cities (14.7 cpl).

Darwin retail prices since the introduction of MyFuel NTThe MyFuel NT scheme commenced on 1 November 2017. It is a territory-wide real-time mandatory retail fuel price reporting scheme, which gives consumers access (via website or mobile app) to live price data from every fuel retailer in the Northern Territory. MyFuel NT is similar to the FuelCheck scheme in NSW.

Chart C4 shows daily average petrol prices and TGPs (lagged by five days) in Darwin over the period 1 September 2017 to 30 June 2020.

67 Report on the Australian petroleum market—June 2020

Chart C4: Daily average retail petrol prices and TGPs in Darwin: 1 September 2017 to 30 June 2020cp

l

Retail price TGP (lagged 5 days)

MyFuel NT introduced 1 November 2017

80

90

100

110

120

130

140

150

160

170S

ep–1

7

Dec

–17

Mar

–18

Jun

–18

Sep

–18

Dec

–18

Mar

–19

Jun

–19

Sep

–19

Dec

–19

Mar

–20

Jun

–20

Source: ACCC calculations based on data from FUELtrac and AIP.

Note: TGPs are lagged by 5 days as there is a time lag between changes in TGPs and changes in retail prices.

Daily average retail petrol prices in Darwin increased significantly prior to the introduction of MyFuel NT, following an increase in TGPs. However, the increase in retail prices (around 11.0 cpl) was larger than the increase in TGPs (around 8.0 cpl) and occurred immediately. Retail prices increased in mid-November 2017 by 5.0 cpl, and again in early December 2017 by a further 4.0 cpl to around 149.0 cpl.

Daily average retail petrol prices in Darwin were 128.8 cpl at the beginning of the June quarter 2020. They decreased steadily to 108.9 cpl at the start of June 2020 and remained around that level until late June when they increased and ended the quarter at 118.8 cpl. In comparison, TGPs (which decreased significantly in the previous quarter) were 92.8 cpl at the beginning of the quarter and decreased further to 84.5 cpl towards the end of April 2020. TGPs then increased throughout May and June 2020 and ended the quarter at 111.3 cpl.

As noted in chapter 4, there are lags between a change in wholesale prices and a change in retail prices. These lags are primarily influenced by the frequency of retail site turnover of fuel, and are longer in regional locations where volume turnover is smaller. Additionally, during the COVID-19 situation, there generally have been fewer motorists purchasing fuel from retail sites, which further increased the turnover time.

Motorists can use the MyFuel NT scheme to identify the highest and lowest priced retail sites in Darwin. For example, on 14 August 2020, it showed that there was a range of 3.4 cpl between the highest priced retail site in Darwin (118.9 cpl at a Coles Express site) and the lowest (115.5 at a BP site).

LauncestonThe ACCC report on the Launceston petrol market was released in July 2016.64 It found that between 2012–13 and the first half of 2015–16, Launceston motorists paid on average around 12 cpl more for petrol than motorists in the five largest cities. The report noted that if the Launceston market was more competitive, motorists could expect savings of 4.0 cpl to 5.0 cpl on a sustainable basis. The three main factors causing higher prices in Launceston were higher transport costs, higher wholesale operating costs and margins, and higher retail operating costs and margins.

64 ACCC, Report on the Launceston petrol market, 20 July 2016, at: https://www.accc.gov.au/publications/petrol-market-studies/report-on-the-launceston-petrol-market.

68 Report on the Australian petroleum market—June 2020

Launceston petrol prices decreased significantly in the June quarter 2020Chart C5 shows quarterly average retail petrol prices in Launceston and the five largest cities over a three-year period from the September quarter 2017 to the June quarter 2020.

Chart C5: Quarterly average retail petrol prices in Launceston and the five largest cities: September quarter 2017 to June quarter 2020

100

110

120

130

140

150

160

170

cpl

Launceston Five largest cities

Sep

–17

Dec

–17

Mar

–18

Jun

–18

Sep

–18

Dec

–18

Mar

–19

Jun

–19

Sep

–19

Dec

–19

Mar

–20

Jun

–20

Source: ACCC calculations based on data from FUELtrac.

In the June quarter 2020, average retail petrol prices in Launceston were 125.4 cpl, a decrease of 30.4 cpl from the March quarter 2020 (155.8 cpl). The average differential between prices in Launceston and the five largest cities was 16.4 cpl, a decrease of 1.6 cpl from the March quarter 2020 (18.0 cpl).

In 2019–20, the annual average retail petrol price in Launceston was 148.6 cpl, a decrease of 7.6 cpl from 2018–19 (156.2 cpl). The annual average differential between Launceston prices and prices in the five largest cities was 14.0 cpl in 2019–20, which was 1.0 cpl lower than in 2018–19 (15.0 cpl).

Launceston prices remained substantially above a long-term competitive cost-based priceChart C6 shows Launceston petrol prices on a rolling annual average basis and estimated Launceston prices calculated on a long-term competitive cost basis from 1 January 2015 to 30 June 2020. These prices have been calculated on the same basis as outlined for Darwin.

The chart shows that the differential between rolling annual average petrol prices in Launceston and a rolling long-term competitive cost-based price increased in the June quarter 2020. The significantly high differential may reflect the absence of vigorous and effective competition in Launceston.

69 Report on the Australian petroleum market—June 2020

Chart C6: Rolling annual average retail prices and a long-term competitive cost-based price in Launceston, and the difference: 1 January 2015 to 30 June 2020

-10

0

10

20

30

40

50

60

70

100

110

120

130

140

150

160

170

180

cpl

cpl

ACCC report released 20 July 2016

ACCC announces Launceston marketstudy 10 May 2015

Di�erence (RHS) Retail price (LHS) Competitive cost-based price (LHS)

Jan

–15

Ap

r–15

Jul–

15

Oct

–15

Jan

–16

Ap

r–16

Jul–

16

Oct

–16

Jan

–17

Ap

r–17

Jul–

17

Oct

–17

Jan

–18

Ap

r–18

Jul–

18

Oct

–18

Jan

–19

Ap

r–19

Jul–

19

Oct

–19

Jan

–20

Ap

r–2

0

Source: ACCC calculations based on data from FUELtrac, Informed Sources and the companies that participated in the Launceston market study.

Notes: A rolling annual average price is the average of that day’s price and prices on the previous 364 days.

A long-term competitive cost-based price assumes that retail margins in Launceston should be broadly similar to long-term average retail margins in the five largest cities.

Motorists in Launceston can use available fuel price websites and apps, such as MotorMouth, to identify the highest and lowest priced retail sites in Launceston. For example, on 14 August 2020, using the MotorMouth app, there was a 7.5 cpl range between the highest priced retail site in Launceston (126.9 cpl at Ampol and Caltex sites) and the lowest (119.4 cpl at a Caltex site).

Launceston GIRDs decreased in the June quarter 2020Chart C7 shows quarterly average GIRDs in Launceston and the five largest cities from the September quarter 2017 to the June quarter 2020.

Chart C7: Quarterly average petrol GIRDs in Launceston and the five largest cities: September quarter 2017 to June quarter 2020

0

5

10

15

20

25

30

cpl

Launceston Five largest cities

Sep

–17

Dec

–17

Mar

–18

Jun

–18

Sep

–18

Dec

–18

Mar

–19

Jun

–19

Sep

–19

Dec

–19

Mar

–20

Jun

–20

Source: ACCC calculations based on data from FUELtrac, AIP, BP, Caltex, Mobil, Viva Energy and FuelWatch.

Note: Hobart TGPs are used as a proxy for TGPs in Launceston.

70 Report on the Australian petroleum market—June 2020

In the June quarter 2020, Launceston GIRDs were 26.7 cpl, a decrease of 2.4 cpl from the March quarter 2020 (when they were 29.1 cpl, the highest quarterly average GIRDs since the ACCC began calculating them in the September quarter 2004). Launceston GIRDs in the June quarter 2020 were 10.8 cpl higher than GIRDs in the five largest cities (15.9 cpl).

In 2019–20, annual average GIRDs in Launceston were 23.2 cpl, an increase of 1.8 cpl from 2018–19 (21.4 cpl). Launceston annual average GIRDs in 2019–20 were 8.5 cpl higher than GIRDs in the five largest cities (14.7 cpl).

ArmidaleThe ACCC report on the Armidale petrol market was released in November 2016.65 It found that relatively weak retail competition in Armidale, reflected by a lack of price discounting, contributed to E10 prices in Armidale being on average 8.0 cpl higher than RULP prices in the five largest cities between 2012–13 and 2014–15.

Armidale petrol prices decreased significantly in the June quarter 2020Chart C8 shows quarterly average retail petrol prices in Armidale and the five largest cities over a three-year period from the September quarter 2017 to the June quarter 2020.

Chart C8: Quarterly average retail petrol prices in Armidale and the five largest cities: September quarter 2017 to June quarter 2020

100

110

120

130

140

150

160

170

cpl

Armidale Five largest cities

Sep–

17

De

c–1

7

Mar

–18

Jun–

18

Sep–

18

De

c–1

8

Mar

–19

Jun–

19

Sep–

19

De

c–1

9

Mar

–20

Jun–

20

Source: ACCC calculations based on data from FUELtrac.

In the June quarter 2020, average retail petrol prices in Armidale were 115.5 cpl, a decrease of 29.0 cpl from the March quarter 2020 (144.5 cpl). The average differential between prices in Armidale and the five largest cities was 6.5 cpl, a decrease of 0.2 cpl from the March quarter 2020 (6.7 cpl).

In 2019–20, the annual average retail petrol price in Armidale was 137.5 cpl, a decrease of 10.0 cpl from 2018–19 (147.5 cpl). The annual average differential between Armidale prices and prices in the five largest cities was 2.9 cpl in 2019-20, which was 3.4 cpl lower than in 2018–19 (6.3 cpl).

65 ACCC, Report on the Armidale petrol market, 21 November 2016, at: https://www.accc.gov.au/publications/petrol-market-studies/report-on-the-armidale-petrol-market. References to petrol prices in Armidale in this appendix are to E10 prices. Armidale prices in appendix B are RULP prices.

71 Report on the Australian petroleum market—June 2020

Armidale prices were above a long-term competitive cost-based priceChart C9 shows Armidale petrol prices on a rolling annual average basis and estimated Armidale prices calculated on a long-term competitive cost basis from 1 January 2015 to 30 June 2020. These prices have been calculated on the same basis as outlined for Darwin.

The chart indicates that in the June quarter 2020, rolling annual average petrol prices in Armidale were above a rolling long-term competitive cost-based price, after being around a rolling long-term competitive cost-based price in the previous quarter.

Chart C9: Rolling annual average retail prices and a long-term competitive cost-based price in Armidale, and the difference: 1 January 2015 to 30 June 2020

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ACCC report released21 November 2016

ACCC announcesArmidale market study3 August 2015

Di�erence (RHS) Retail price (LHS) Competitive cost-based price (LHS)

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Source: ACCC calculations based on data from FUELtrac, Informed Sources and the companies that participated in the Armidale market study.

Notes: A rolling annual average price is the average of that day’s price and prices on the previous 364 days.

A long-term competitive cost-based price assumes that retail margins in Armidale should be broadly similar to long-term average retail margins in the five largest cities.

Motorists in Armidale can use the FuelCheck website and app to identify the highest and lowest priced retail sites in Armidale. For example, on 17 August 2020, the FuelCheck website showed that there was a 2.9 cpl range between the highest priced RULP retail site in Armidale (119.9 cpl at Caltex Armidale) and the lowest (117.0 cpl at Beardy Street Servo). There was a 1.0 cpl range between the highest priced E10 retail site (118.9 cpl at two Caltex sites) and the lowest (117.9 cpl at Lowes, Coles Express, Woolworths and Caltex sites).

Armidale GIRDs decreased in the June quarter 2020Chart C10 shows quarterly average GIRDs in Armidale and the five largest cities from the September quarter 2017 to the June quarter 2020.

72 Report on the Australian petroleum market—June 2020

Chart C10: Quarterly average petrol GIRDs in Armidale and the five largest cities: September quarter 2017 to June quarter 2020

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Source: ACCC calculations based on data from FUELtrac, BP, Caltex, Mobil, Viva Energy and FuelWatch data.

Note: Sydney and Brisbane E10 TGPs from monitored companies are used as a proxy for Armidale TGPs.

In the June quarter 2020, average GIRDs in Armidale were 20.9 cpl, a decrease of 2.3 cpl from the March quarter 2020 (23.2 cpl). Armidale GIRDs in the June quarter 2020 were 5.0 cpl higher than the five largest cities (15.9 cpl).

In 2019–20, annual average GIRDs in Armidale were 17.7 cpl, a decrease of 1.7 cpl from 2018–19 (19.4 cpl). Armidale annual average GIRDs in 2019–20 were 3.0 cpl higher than GIRDs in the five largest cities (14.7 cpl).

CairnsThe ACCC report on the Cairns petrol market was released in May 2017.66 It found that between 2012–13 and the first half of 2016–17, the average differential between prices in Cairns and the five largest cities was around 11.0 cpl. It concluded that a lack of vigorous and effective retail price competition in Cairns contributed to the increase in retail margins and profits.

Cairns petrol prices decreased significantly in the June quarter 2020Chart C11 shows quarterly average retail petrol prices in Cairns and the five largest cities over a three-year period from the September quarter 2017 to the June quarter 2020.

66 ACCC, Report on the Cairns petrol market, 29 May 2017, at: https://www.accc.gov.au/publications/petrol-market-studies/report-on-the-cairns-petrol-market.

73 Report on the Australian petroleum market—June 2020

Chart C11: Quarterly average retail petrol prices in Cairns and the five largest cities: September quarter 2017 to June quarter 2020

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Source: ACCC calculations based on data from FUELtrac.

In the June quarter 2020, the average retail petrol price in Cairns was 116.2 cpl, a decrease of 27.9 cpl from the March quarter 2020 (144.1 cpl). The average differential between prices in Cairns and the five largest cities was 7.2 cpl in the June quarter 2020, an increase of 0.9 cpl from the March quarter 2020 (6.3 cpl).

In 2019–20, the annual average retail price in Cairns was 136.7 cpl, a decrease of 11.4 cpl from 2018–19 (148.1 cpl). The annual average differential between Cairns prices and prices in the five largest cities was 2.1 cpl in 2019–20, which was 4.8 cpl lower than in 2018–19 (6.9 cpl).

Cairns prices were marginally above a long-term competitive cost-based priceChart C12 shows Cairns petrol prices on a rolling annual average basis and estimated Cairns prices calculated on a long-term competitive cost basis from 1 January 2015 to 30 June 2020. These prices have been calculated on the same basis as outlined for Darwin.

The chart indicates that in the June quarter 2020, rolling annual average petrol prices in Cairns were marginally above a rolling long-term competitive cost-based price, after moving below a competitive cost-based price in the second half of the December quarter 2019.

The ACCC’s December quarter 2019 petrol monitoring report noted that relatively lower Cairns petrol prices may have been influenced by more vigorous competition following the increasing presence of United in the Cairns area since the March quarter 2018.67

67 ACCC, Report on the Australian petroleum market—December quarter 2019, p. 58, at: https://www.accc.gov.au/publications/quarterly-reports-on-the-australian-petroleum-industry/quarterly-report-on-the-australian-petroleum-market-december-quarter-2019.

74 Report on the Australian petroleum market—June 2020

Chart C12: Rolling annual average retail prices and a long-term competitive cost-based price in Cairns, and the difference: 1 January 2015 to 30 June 2020

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ACCC report released 30 May 2017

ACCC announces Cairns market study 19 April 2016

Di�erence (RHS) Retail price (LHS) Competitive cost-based price (LHS)

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Source: ACCC calculations based on data from FUELtrac, Informed Sources and the companies that participated in the Cairns market study.

Notes: A rolling annual average price is the average of that day’s price and prices on the previous 364 days.

A long-term competitive cost-based price assumes that retail margins in Cairns should be broadly similar to long-term average retail margins in the five largest cities.

Cairns GIRDs increased in the June quarter 2020Chart C13 shows quarterly average GIRDs in Cairns and the five largest cities from the September quarter 2017 to the June quarter 2020.

Chart C13: Quarterly average petrol GIRDs in Cairns and the five largest cities: September quarter 2017 to June quarter 2020

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Source: ACCC calculations based on data from FUELtrac, BP, Caltex, Mobil, Viva Energy and FuelWatch.

In the June quarter 2020, average GIRDs in Cairns were 19.7 cpl, an increase of 1.2 cpl from the March quarter 2020 (18.5 cpl). Cairns GIRDs in the June quarter 2020 were 3.8 cpl higher than in the five largest cities (15.9 cpl).

75 Report on the Australian petroleum market—June 2020

In 2019–20, annual average GIRDs in Cairns were 12.9 cpl, a decrease of 2.2 cpl from 2018–19 (15.1 cpl). Cairns annual average GIRDs in 2019-20 were 1.8 cpl lower than GIRDs in the five largest cities (14.7 cpl).

Cairns retail prices since the introduction of the Queensland fuel price reporting trialThe Queensland fuel price reporting trial commenced on 3 December 2018. The two-year trial requires all Queensland fuel retailers to report their undiscounted fuel prices to a data aggregator, and gives consumers access to the price data via apps and websites.

Chart C14 shows daily average petrol prices and TGPs (lagged by five days) in Cairns from 1 October 2018 to 30 June 2020.

Chart C14: Daily average retail petrol prices and TGPs in Cairns: 1 October 2018 to 30 June 2020

Qld fuel price reporting trial introduced 3 December 2018

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Source: ACCC calculations based on data from FUELtrac, BP, Caltex, Mobil and Viva Energy.

Note: TGPs are lagged by 5 days as there is a time lag between changes in TGPs and changes in retail prices.

Retail prices in Cairns started to decrease prior to the introduction of the Queensland fuel price reporting trial. They reached a high of 167.1 cpl in mid-November 2018, and subsequently decreased by 42.2 cpl to 124.9 cpl in early February 2019. This followed similar movements in TGPs, which reached a high of 150.8 cpl in mid-October 2018 and subsequently decreased by 35.4 cpl to a low of 115.4 cpl in early January 2019.

Daily average retail petrol prices in Cairns were 130.0 cpl at the beginning of the June quarter 2020 and decreased steadily to 104.9 cpl in mid-May 2020. Prices then increased to 111.9 cpl in late May, and increased further in mid-June to end the quarter at 120.5 cpl. In comparison, TGPs (which decreased significantly in the previous quarter) were 93.3 cpl at the beginning of the quarter and decreased further to 84.2 cpl towards the end of April 2020. TGPs then increased throughout May and June 2020 and ended the quarter at 109.9 cpl.

As noted in chapter 4, there are lags between a change in wholesale prices and a change in retail prices. These lags are primarily influenced by the frequency of retail site turnover of fuel, and are longer in regional locations where volume turnover is smaller. Additionally, during the COVID-19 situation, there generally have been fewer motorists purchasing fuel from retail sites, which further increased the turnover time.

Motorists in Cairns are able to access site-specific petrol price data made available by websites and app providers under the Queensland fuel price reporting trial to identify the highest and lowest priced retail sites in Cairns. For example, on 11 August 2020, using the Petrol Spy website, there was a 9.6 cpl range between the highest priced retail site in Cairns (123.9 cpl at a BP site) and the lowest (114.3 cpl at United, Liberty, Woolworths, Puma and Caltex sites).