Sydney’s artificially inflated petrol prices don’t pass the pump test

Sydney is having an unusual Christmas/New Year holiday at the petrol bowser. Having topped 200.6¢ per litre earlier in the month, on Monday our petrol was down to an average price of 183.8¢ for regular unleaded.

The holiday from high petrol prices stands in stark contrast to the fuel companies’ recent habit of blithely charging Sydney motorists well above competitive prices. NRMA analysis of 2024 prices found Sydney, Brisbane and Melbourne, the three most populous cities – where competition should drive prices down – were among the most expensive, trailing only Canberra. More competition and real-time data in Darwin turned it from the nation’s most expensive fuel titleholder to the second cheapest after Perth.

Australian petrol prices hit a record high in April but have plummeted since.Credit: Steven Siewert

The price of unleaded petrol in Sydney was 9.7¢ per litre more per litre compared to Perth, and 8.9¢ more in Melbourne. For an average family that fills one 55-litre tank with unleaded petrol once a week, the annual bill is $277 more in Sydney compared to Perth, and $255 more in Melbourne.

Part of the problem stems from differing state pricing regimes. Perth, for instance, has a one-week price cycle among fuel retailers, while service stations in the nation’s biggest capital cities consistently cycle their prices over a six-week period, which is too long for motorists to wait out high price periods before they fill their tanks. Prices also take about two weeks to shift from the lowest point to the peak, but they remain elevated for weeks and they take about a month to return to the bottom. In Perth, the same cycle takes just seven days.

NRMA spokesperson Peter Khoury said price cycles in Australia’s largest cities continued to affect
family budgets and the rate of inflation. “Longer price cycles in Sydney, Brisbane and Melbourne are no friend of the Australian motorist nor our economy with a cost-of-living election looming in 2025,” Khoury said.

The Albanese government has moved on some aspects of fuel pricing. Its mandatory pollution caps on new car sales come into effect on January 1. It is a reform it hopes will encourage carmakers to sell more efficient petrol vehicles or electric cars and save drivers $1000 in fuel a year. A spokesperson for Treasurer Jim Chalmers, whose portfolio includes the ACCC, said it monitored petrol prices to ensure fair pricing: “We don’t want to see service stations take Australian motorists for mugs.”

The ACCC monitors fuel prices, which are largely influenced by global factors including the international price of crude oil, and the exchange rate compared to the US dollar. But price cycles are a result of retailers’ pricing policies, which do not occur in Canberra, Hobart and Darwin.

A free and fair market depends for its operation on trust. Consumers need to know that in taking part in a business transaction, they are not being ripped off. We agree with the NRMA that the time has come for the ACCC to review the fuel price cycles that unfairly trap motorists in Sydney, Brisbane and Melbourne.

Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.