Australia’s competition watchdog will name and shame petrol retailers who engage in price gouging, saying a plummeting world oil price and a break in the “dreadful cartel” of global oil producers should be reflected in lower prices at the bowser.
The Australian Consumer and Competition Commission was given a renewed directive by the treasurer last month to monitor and report quarterly on petrol prices around the country, including reporting on profiteering in the retail and wholesale sectors.
The international oil price has fallen about 20% in the first two months of 2020 to roughly US$55 a barrel. Refined petrol prices have fallen by a similar amount.
The collapse in global prices was sparked by a falling out between two major producers: Russia and the Organization of the Petroleum Exporting Countries, which is led by Saudi Arabia. They have been acting as a cartel since 2016, orchestrating supply cuts to keep prices high.
Saudi Arabia wanted to keep production artificially low but Russia worried this was opening up the market for US producers, and said it would abandon the alliance. Saudi Arabia responded by launching a price war.
In Australia February’s monthly average petrol price across Adelaide, Brisbane, Melbourne, Perth and Sydney was 141.1 cents a litre, an 8.2% drop from December.
Daily Brent crude oil prices fell a further 22% last Monday: the ACCC has said it expects this will lead to a further fall in domestic petrol prices.
The treasurer, Josh Frydenberg, told the head of the ACCC, Rod Sims, last week to ensure that petrol retailers passed on the price reductions.
“I spoke to Rod Sims... to re-emphasise holding the oil retailers to account and ensure that Australians get the benefit on lower oil prices,” Frydenberg said.
Sims said Australian petrol prices at the pump were primarily influenced by international crude oil and refined petrol prices.
“Therefore, a sustained drop in these prices should – all else being equal – lead to lower prices at the local bowser,” he said.
“We will be looking at the market very closely to determine if further sustained reductions in international prices are being passed on to consumers, and we will be publicly identifying those retailers that are not passing on reductions.”
The ACCC does not have the power to set prices or profit margins in petrol markets, nor is it able to restructure petrol markets or make them operate more efficiently. Rather, the ACCC’s petrol monitoring role is to assist consumers to navigate this complex industry.
“We can call out problematic price setting, which can influence company behaviour,” Sims said.
Sims said lower oil prices might be one of the few positives to emerge from the coronavirus crisis, and that the Australian economy needed all the assistance it could get.
“Hopefully, the recent break between Russia and Opec marks the start of the waning influence of this dreadful cartel on international crude oil prices,” he said.
