Fuel drops less than 84c in Melbourne after US oil prices collapse
Petrol prices plummeted across Melbourne yesterday after the cost of oil collapsed — but not all retailers are passing on the full savings benefit to motorists.
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Petrol stations have been warned not to profiteer from the COVID-19 pandemic, and to pass on the full benefit of falling oil prices to motorists.
It comes as prices yesterday plummeted after the cost of oil collapsed and went into the negative for the first time in history.
Melbourne motorists can fill up at the pump for less than 84c/litre.
The nation’s consumer watchdog said the coronavirus crisis should not be used to further increase profits, which had risen in recent years.
Australian Competition and Consumer Commission chairman Rod Sims said petrol retailers in major cities had taken too long to pass on savings from plummeting global oil costs.
— Have you seen cheaper petrol prices in Melbourne today? Email news@heraldsun.com.au
However, fuel prices in regional Australia were generally higher in regional due to lower population and demand and fewer outlets, which often led to less competition. There were also transport and fuel storage costs, and fewer sales from convenience items.
Price changes in regional centres could lag up to six weeks behind changes in capital cities. The reduction in demand for petrol due to current travel restrictions may have further exacerbated the delay.
Mr Sims said motorists who sought out competitively priced outlets sent “ a strong message to those that have high prices that they will lose your business”.
“Especially at this difficult time, retailers must not take advantage of the situation to increase their profits, but should pass on savings to motorists,” he said.
According to petrolspy.com.au, Melbourne’s cheapest petrol can be found in the south and east, including Moorabbin Costco, where members can fill up their tank for just 83.6c a litre, and United Croydon, at 410 Maroondah Highway (83.9c).
United Kew (84.9c), Woolworths Caltex (Lilydale 87.9c, Chirnside Park 89.9c) are also offering fuel on the cheap, as is 7-Eleven Brandon Park (88.2c).
RACV senior vehicle engineer Nicholas Platt said fuel prices across Victoria were trending down, with no indicators that retail prices would spike any time soon.
“The wholesale prices are currently at approximately 81c and as part of the competitive discounting, many retailers may even drop their prices to as low as the wholesale price,” Mr Platt said.
“Across metro Melbourne, the average retailer price is at 99c, which was last seen in Melbourne in February 2016.”
It comes as the US oil benchmark was yesterday smashed to its lowest level since 1999 and plunged again overnight.
The cost for a barrel of US oil to be delivered in June plunged 43 per cent overnight to $US11.57.
A day earlier, oil futures fell below zero for the first time.
As billions of people around the globe stay home to slow the spread of COVID-19, physical demand for crude has dried up, creating a global supply glut.
Mr Platt said while Australia did not directly purchase oil from the United States, it was expected for the global markets to be impacted as most oil stock prices worldwide follow a similar trend.
“Consequently, if oil prices are sustained, then we should expect a knock-on effect on wholesale prices in Australia.
“Usually there is a lag time of two weeks to reflect shipping and refining times; however, recently we have seen wholesale prices react much more swiftly to changes in commodity prices.”
He urged drivers to fill up now to get the best deal.
“A consistently low price would be ideal for motorists in this uncertain time as it can discourage people from travelling further than necessary to find cheaper fuel.
“We recommend motorists use RACV’s online fuel price comparison tool to find the cheapest fuel locally and fill up now if possible.”
PETROL RETAILERS REAP MASS PROFITS
The warning comes as a new report reveals retailers reaped a record $333 million net profit from petrol products in 2017-18.
That equated to a net profit of 3c a litre — almost double the average of 1.6c from 2008-09 to 2013-14.
Profits on premium fuel were the most lucrative at 5.8 to 5.9c a litre, while profit on regular unleaded was 1.5c a litre.
The ACCC said a drop in weekly average international crude oil prices of about US$50 a barrel since the start of the year had largely flowed through to wholesale petrol prices, which had fallen about 50c a litre.
Over the same period, seven-day rolling average petrol prices across major cities had decreased about 45c a litre. Petrol price cycles made it hard to assess the exact flowthrough in the short term.
“The drop in the crude oil price is good news for the Australian motorists. At this time the Australian economy needs all the assistance it can get, and lower world crude oil prices are one of the few positives from current world events,” ACCC chairman Rod Sims said.
“In the larger Australian capital cities, petrol retailers took too long to pass on the savings from the rapid drop in international oil prices, and this did not reflect well on them.”
Retailers also earned substantial profits from convenience store sales, the ACCC report found.
Convenience and other non-fuel sales contributed about 37 per cent of total retail sector net profits ($226 million) in 2017-18.
“Petrol stations make most of their profits from convenience sales and premium fuel. The average net profits on regular unleaded, at about 1.5 cpl are only a small part of the price motorists pay,” Mr Sims said.
“Drivers who have the option, can save money by resisting the temptation of convenience foods at petrol stations and using regular unleaded petrol, although motorists should follow their car manufacturers’ advice.”