Cross the Clyde and throw reason out the window, is TERRY McGEE’S take on fuel prices in the Eurobodalla.
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In our last Hairy Eye, we looked at fuel price mark-ups along the coast, from Sydney to Bega, averaged over the past six months.
We also raised the question, what would constitute a reasonable mark-up?
The Australian Institute of Petroleum website discusses the topic, but strangely re-
frains from providing any information or views of its own.
Rather, it extensively quotes the “industry watchdog”, the Australian Comp-etition and Consumer Commission (ACCC).
“. . . the ACCC estimates that prices in regional centres and country towns have been about 5.8 cents per litre higher, on average, than prices in the five largest capital cities over the past 10 years,” the site says.
“Over the same period, the country-city price difference across all states and territories has averaged 2.9 cents per litre.”
Further, “. . . the ACCC has found that if a typical country service station is selling around half the volume of a typical city service station, then it needs to sell petrol at around 4 cents per litre more to earn the same return on sales”.
Huh? I’m not quite sure how to interpret all that.
Is the expected country-city mark-up 2.9, 4 or 5.8 cents per litre?
Let’s go with the 4 cents figure, but also build in an allowance for transporting the fuel.
On this topic, the Australian Institute of Petroleum says: “Dis-tance (and thereby freight costs) is also important and, usually, the further the service station location is from a refinery or major terminal, the higher the retail price.
“On average, freight is typically around 1.5 to 4 cents per litre greater for country than city delivery.”
Again, a bit odd.
Why should delivery to a nearby country service station cost 1.5 cents more than delivery to Sydney?
Remember, the Sydney mark-up figure already includes transport. Another Hmmm.
Just how far do you have to go to rack up the 4 cents per litre charge?
But let’s just shrug our shoul-ders and say Woll-ongong 1.5 cents, and Broken Hill 4 cents.
Our graph derives from last week’s, but I’ve factored in the average difference between ULP and E10 prices to correct for the fact that the data sometimes switches types.
I’ve also superimposed the ACCC’s expected 4 cents mark-up over Sydney prices and the proportional transport charges (in blue) so we can compare them with the real mark ups (in red).
Whoa, how about that?
First thing to note is that transport costs for the fuel do not make a big difference.
Those massive trailer tankers carry tens of thousands of litres of fuel and their operation is very efficient.
This was never about freight and distance.
Note that Wollongong routinely comes in under the ACCC prediction.
Not surprisingly.
As I pointed out last week, Wollongong isn’t much further from the terminals than Sydney, and the roads are less clogged.
The real question should be why is Wollongong not enjoying Sydney prices?
Nowra comes in a bit on the high side, but the Ulladulladians appear close to the money.
However, cross the Clyde, and all reason goes out the window!
Instinctively, we know who’s going to come off worst.
About 10 cents per litre, 78 per cent over budget! Long-term, averaged!
Now, I might be misunderstanding the figures, and there might be a rational explanation. Please?
Related coverage: Hairy eye on fuel prices
