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Lack of competition driving high Brisbane petrol prices

The ACCC has today released the findings of its study into the Brisbane petrol market, which shows a lack of competition is causing Brisbane motorists to pay more for petrol than in Sydney, Melbourne, Adelaide and Perth.

Between 2009–10 and 2016–17, Brisbane motorists paid 3.3 cents per litre (cpl) more for petrol on average than motorists in Australia’s other four largest cities.

“The ACCC’s report confirms Brisbane drivers’ suspicions that they are paying too much for petrol, and that some local fuel retailers are enjoying high profit margins at their expense,” ACCC Chairman Rod Sims said.

The report found that the average net profit per site in Brisbane was significantly higher than the average net profit per site across Australia. In 2015–16, for example, in Brisbane it was around 55 per cent higher.

Retailers in Brisbane achieved higher margins and profits due to weak retail competition. Over the first four months of 2017, the difference between retail prices and wholesale prices at the bottom of the price cycle was substantially higher in Brisbane than Sydney. This was also true at the peak of the price cycle.

“The high retail prices and margins for petrol in Brisbane have cost motorists there around $50 million per year more than their interstate counterparts since 2009–10. This is despite wholesale prices in Brisbane being similar to those in the other four largest cities,” Mr Sims said.

The report found that over the first four months of 2017, the extent of aggressive retail pricing by independent chains was significantly lower in Brisbane than Sydney.

“Independent chains can be competitive price setters in large metropolitan markets, and their absence means that prices are otherwise higher. There are only four independent chains in Brisbane: 7-Eleven, Puma Energy, Freedom Fuels and United,” Mr Sims said.

“By comparison, Sydney has seven independent chains, some of which explicitly state their aim to sell competitively-priced petrol. A key reason that Brisbane prices are higher than other capital cities is the lack of independent chains,” Mr Sims said.

The attached charts show that in Brisbane, the four lowest priced retailers were on average only around 1.3 cpl below the market average price, while in Sydney the four lowest priced retailers were on average around 3.8 cpl below the market average price.

Information about current petrol prices, which is readily available through a number of apps and websites, can enable consumers to shop around and purchase fuel at relatively lower priced retail sites. The ACCC’s charts below show the wide range of petrol prices by petrol retailers.

“In Brisbane, there is usually a wide range of prices at retail petrol sites across the city. By timing their purchases of petrol, and choosing to buy from the lowest priced retailer, motorists filling up a vehicle with a 60 litre tank could save themselves in the region of $10–$15 per tank of petrol,” Mr Sims said.

“I strongly encourage drivers to download fuel price apps and check websites to decide when to buy petrol and from which site as this may encourage stronger price competition among Brisbane retailers.”

The report is available at Report on the Brisbane petrol market