Canberra petrol stations made double the profit of their counterparts across Australia last year
By Jake EvansIf you suspected that petrol stations in Canberra are ripping you off — you are right.
The numbers have been laid out black and white in a report into fuel pricing by the Independent Competition and Regulatory Commission (ICRC), which found Canberra's fuel retailers make on average a $750,000 profit annually, compared to $400,000 at sites across Australia.
In the last financial year, Canberra's retailers made more than double the profit of sites in towns like Batemans Bay, Wagga Wagga and Goulburn, where prices are generally cheaper.
Chief Minister Andrew Barr ordered the commission to investigate on suspicion of price gouging in the territory.
Fuelled by his anger against retailers, Mr Barr told a separate ACT Legislative Assembly inquiry yesterday that he was not afraid to step in and regulate petrol pricing.
"I'm not going to be in the business through this process of defending many of the retailers, who I think have behaved appallingly," he said.
"In my mind there's a number of different solutions we need to look at, some of which are within the control of the ACT Government, many of which have been tried before and have succeeded for a short period of time."
One of the solutions put forward was a legislated maximum retail margin.
"If we don't get behavioural change from the retailers then that has to be on the table," Mr Barr said.
"If you want a serious intervention beyond the pop-gun that is, freeze the prices for 24 hours at their already high levels, or try and introduce more competition, you need to go down that path."
But the inquiry challenged the implication there was a gouge at all.
"More fuel is being sold at below average prices than it was at above average prices," opposition spokesman for business Andrew Wall said.
"To suggest that there's a gouge going on, I'm trying to get what your evidence base for that is."
Nine cents per litre higher than Sydney
Nationally, retailers have limited control over the price of petrol; 90 per cent of the final price of petrol is the wholesale cost.
But in Canberra, that only made up about 86 per cent of the price paid at the pump.
Over the past six years, unleaded petrol prices in Canberra were on average about 9c per litre higher than in Sydney, and 2.3c per litre higher than the towns surrounding Canberra.
In the last financial year, retailers in Canberra charged on average 1.7c per litre more than those in the surrounding region, and 80 per cent of that was pure profit.
"Canberra service stations typically make larger profits than those in the regional comparison locations, in part due to a higher volume of fuel sold in Canberra and, in recent years, an increase in the net retail margin," senior commissioner Joe Dimasi said in his report.
The commissioner attributed that gap to the weak competition in Canberra, and a lack of visibility of petrol stations — making it difficult to compare prices.
"Petrol retailers in Canberra are typically located off major roads and in local shopping and industrial districts," the commissioner said..
"In contrast, petrol retailers in Sydney are often located on main roads."
And to little surprise to most Canberrans, the commissioner found that at the airport and in Fyshwick, where there were independent outlets in sight of the big retailers, retailers had the lowest prices and smallest profit margins.
Representing Coles Express owners Viva Energy, which took over pricing for Coles in March, communications manager Edwina Pribyl did not deny Canberra's retailers might be price gouging.
"Just driving around the Canberra market this morning we did observe that some of the Coles Express sites were slightly above some of the competitors," she told ABC Radio Canberra today.
Ms Pribyl said Viva intended to price more competitively in Canberra in the coming years.
Representatives from 7-Eleven, and the Australian Institute of Petroleum will also front the Government's inquiry into fuel pricing today.