Consumer watchdog dismisses Coalition calls to break up fuel companies

Guardian Web |

The head of Australia’s competition regulator has shrugged off demands to lower fuel excise or break up petrol companies, arguing that consumers shopping around for cheaper petrol is the best response to high prices.

Rod Sims made the comments to Radio National on Wednesday, after the Liberal MP Craig Kelly called on the government to consider cutting the fuel excise by 10c a litre and the former deputy prime minister Barnaby Joyce suggested forced divestiture powers should be used against petrol companies.

Sims said that a total of 85% of the cost to consumers to fill up is due to either the international oil price – which makes up almost 50% of the retail petrol price – and “the rest [of the 85%] is tax”.

“Before you even get to local service station, 85% of the price is explainable by things that it’s hard to do anything with,” he said.

Sims said the best things consumers could do was shop around because they could “save real money if they work out when to buy and where to buy”. Prices can vary by 10c a litre for the most expensive petrol in Sydney – at Coles – and the cheapest, at independents, he said.

Timing a trip to the bowser at the right point in the “wretched price cycle in capital cities” – as petrol stations lower prices during the week and raise them on weekends – can also save consumers money.

Asked if retail margins were to blame for high prices, Sims said that margins are “2c higher than they should be in most cities” and 4c-5c higher in Brisbane.

He said consumer complaints about prices spiking from $1.30 a couple of years ago to $1.60 or $1.70 now is “clearly driven by overseas oil prices and the exchange rate”.

“Yes, I think margins are a bit too high – because service stations rely on people not shopping around.”

Sims said he could not think of any action he could recommend to government that would be cost effective to deal with retail margins.

Asked about Kelly’s call to drop fuel excise, Sims noted that excise pays for roads and he supports quarantining revenue from excise to pay for roads.

He also rejected calls to break up petrol companies, noting that “you’ve got a whole lot of servos all over the place, I really don’t think divestment will deal with the issue”.

On Monday, the prime minister, Scott Morrison, said the ACCC was the “cop on the beat” designed “to make sure that all these petrol companies … do the right thing by customers”.

“There are some things we can’t control, what’s happening with international oil prices and things like that … but we can ensure that the people who are selling it here behave,” he said.

But on Tuesday Morrison said the government was taking action against electricity companies “to make sure we have the big stick to force those prices down and I expect them to respond” and would consider measures to reduce petrol prices as well.

“Now I expect the fuel companies to respond too, and the government will consider any number of measures, but it is in the hands of the fuel companies to do the right thing by its customers and the ACCC and I will be watching very, very closely.”

Sims said the prime minister was right that the ACCC had powers and a dedicated petrol unit to monitor the market carefully and prosecute illegal behaviour.

He defended the ACCC’s record, noting it had already “taken a lot of action” by prosecuting cases on whether shopper dockets increased the underlying price of petrol and petrol companies shared price information with each other that was not available to consumers.

“We’re taking action pretty much all the time. I think we have saved consumers a lot of money.”

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