Motoring body NRMA calls out rampant ‘over pricing’ for diesel prices

The NRMA has accused service stations of price gouging as the gap between wholesale and retail prices for diesel reaches new heights in capital cities.

More than two thirds of all diesel sold in Australia is used by industry, meaning that ‘overcharging’ has a direct impact on inflation and costs for freight operators and other small businesses. Picture: News Regional Media

The NRMA has accused service stations of price gouging as the gap between wholesale and retail prices for diesel reaches new heights in capital cities across the country, increasing pressure on the supply chain and exacerbating the cost of living crisis.

Diesel prices have remained “stubbornly high”, with the average price at the bowser sitting 18 cents per litre above the wholesale price in Sydney this year, the highest ever recorded, up from an ­average of 12.4 cents in 2021 and 11.2 cents in 2019, with similar gross margins being recorded in other capital cities, analysis by NSW’s peak motoring body NRMA shows.

NRMA spokesman Peter Khoury said more than two-thirds of all diesel sold in Australia is used by industry, meaning that the rampant “overcharging” was having a direct impact on inflation and increasing costs for freight operators and other small businesses.

“The gross margins for diesel prices in Australia have been too high for too long and they need to come down now,” Mr Khoury said.

“Australia’s economy runs on diesel and over-inflated fuel prices impact the whole supply chain and it is the fuel of choice for millions of Australian families. Global factors have worked against Australians since the world came out of the Covid lockdown and Russia’s ­brutal invasion of Ukraine – domestic issues should not be compounding the problem.”

Gross margins for diesel were similarly high across Melbourne, Brisbane, Darwin, Canberra and Hobart, with the highest prices for diesel in Darwin at 209.4 cents per litre on average, Hobart with 206.7 cents, Canberra with 204.9 cents, Sydney with 196.9 cents, Melbourne with 198.4 cents and Brisbane with 197.4 cents.

Prices were significantly higher at major service station chains rather than independent retailers, with the average price of diesel at the major suppliers at 200.6c per litre and 198.4 cents at the independents, the NRMA found.

Victorian Transport Association chief executive Peter Anderson said the price of diesel remained high and had a significant impact on the freight industry as a major cost for operators.

“Diesel is a major cost factor in any transport business; it represents 20 to 35 per cent of direct costs. So for every dollar, about 30 cents goes to the cost of diesel,” Mr Anderson said. “So heavy freight transport is very sensitive to the rise and fall of diesel prices.”

Mr Anderson said the industry was also under pressure because of the inconsistent way in which surcharges were applied, with some industries refusing to pay them, meaning fluctuating fuel prices fell on operators and called for the issue to the addressed.

“In the US, there’s a national body. Ours is an industry-based mechanism, which varies company to company,” he said. “We would like to see something introduced that is way more consistent, far more transparent and far more accountable.”

Road Freight NSW chief executive Simon O’Hara said the price of diesel had increased significantly over the course of the past 2½ years since the pandemic.

“We would like to see the price at the pump as close as possible to wholesale costs,” he said. “It ensures our operators can continue to be profitable and also ensures as much as possible food and products are priced as best as possible given the rising costs we’ve seen over the 18 months … It’s a tough industry in terms of profit margin and you’re seeing each year it’s getting harder to get a buck,” he said.

The international benchmark price for diesel is trading at $US101 a barrel coming off a record high of $US186 a barrel in June last year.