RAA alert: Motorists being lured with cheap fuel to buy fast food and household items at high prices
CHEAP petrol in many parts of Adelaide sounds too good to be true – and for some it is.
PETROL stations currently selling fuel below wholesale cost in Adelaide are using the sales to lure more motorists into buying fast food and household items at inflated prices, the RAA has warned.
RAA spokesman Mark Borlace said the organisation had observed the new trend, in which low fuel prices meant other prices were covering losses on fuel.
Mr Borlace was commenting on a cluster of petrol stations in the inner southern suburbs which continued to sell discounted fuel, despite the trend not being taken up in other areas.
Unleaded petrol at the outlets – which are run by different retailers – was being sold as low as 93 cents per litre yesterday, well below the wholesale price of 109 cents per litre.
Mr Borlace said the practice explained why motorists in the inner southern suburbs were taking advantage of the cheapest fuel prices in Adelaide in over a year.
He said at sites selling below the wholesale cost, the prices for other non-fuel items were set even above the usual high cost of items sold at the convenience stores connected to petrol stations
“We used to say ‘don’t reward petrol stations that sell fuel at inflated prices by buying their other products’, now we also say ‘watch out for the price of other products when they are discounting the fuel’,’’ he said. “Fuel is becoming a marketing tool
“We think they are doing it to enhance and protect their foot traffic to the high profit areas. It is all part of the marketing strategy.’’
Mr Borlace said the RAA was usually able to predict when the cheap-price trend would break and prices would spike again, but the current marketing strategy made this difficult for the present round of discounting.
“There are smoke and mirrors out there and some very funny shaped cycles in the petrol price,’’ he said.
“What is causing this – motorists think of petrol as an everyday commodity to use and replace, but retailers see petrol as a traffic generator for their forecourts.
“They see motorists who pull in as potential customers for a Subway or a Wendy’s, or expensive bread or milk.’’
Mr Borlace said it would be difficult to police the practice of increasing prices for household items or fast food at the same time as fuel was discounted, because retailers would resist allowing regulators to come in and monitor prices.
He said the practice of using fuel as a lure was replacing a trend in independents leading the discount cycle to generate fuel sales.
Mr Borlace said the RAA encouraged motorists to buy the cheapest fuel, but not reward discount fuel outlets with purchases of inflated items.