VACC, the peak automotive industry body in Victoria, has questioned the underlying causes of the current lower than average retail fuel prices for unleaded petrol in metropolitan areas of the state. Today, pump prices in Melbourne are as low as 121.9 cents per litre whereas in regional areas it is 20-25 cents per litre higher. For example, yesterday, in Warrnambool unleaded petrol was 147.0 cents per litre, in Swan Hill it was 147.3 and in Colac it was 149.9.

“Australia’s fuel prices are determined by a complex combination of factors including world oil prices, the Australian dollar and transport and delivery costs. However, the retail prices at the pump are really determined by Coles and Woolworths and their oil company partners, Shell and Caltex, respectively,” VACC Executive Director, David Purchase, said.

“The supermarkets control more than fifty per cent of the Australian retail fuel industry and lead the way on pump prices. Independent service station owners in metropolitan areas have no choice but to follow their pricing even if, as is happening now, it means they have to sell at a loss. For example, fuel is being sold at 121.9 cents per litre but the actual cost price is closer to 126.9 cents per litre.

“Metro prices are out of step with the rest of the state. Fuel prices in regional areas appear high in comparison, however, in reality they are around the price we would normally expect to pay in cities,” Mr Purchase said.

For years, VACC has voiced concerns about the influence Coles and Woolworths have on retail fuel prices to the Australian Competition and Consumer Commission (ACCC). VACC has called on ACCC to monitor predatory pricing and abuse of market power in the retail fuel industry and welcomed last month’s announcement by ACCC to investigate price information sharing arrangements in the retail petrol industry.

“Independent service stations, especially in urban areas, do not have the ability to offset lower than average petrol prices by heavily discounted in-store groceries or through discount docket schemes. If fuel retailers are currently operating at a loss and selling fuel below the wholesale price, it begs two questions: firstly, why would market leaders chose to do this and secondly how are they compensating for it? We would be interested to know the answers,” Mr Purchase said.

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