Poor geographic spread of cheap petrol stations affecting ACT prices

A Legislative Assembly committee investigating the ACT's fuel prices held its first public hearing on Thursday, with witnesses from international price monitoring company Informed Sources giving evidence.

Representatives of the company, which provides price monitoring information to fuel retailers and consumers, told the committee the ACT suffered from a range of factors that may be pushing the cost of fuel up compared to other areas.

The company's analysis showed that of comparable large regional cities in Australia, Canberra's average unleaded fuel price in 2018 was second only to Hobart and exceeded prices in Townsville, the Sunshine Coast and Wollongong, among others.

It also showed the ACT had the lowest percentage of discount or independent retailers of all states or territories, at just nine per cent compared to around 23 per cent in most other states, up to 57 per cent in the Northern Territory.

Informed Source's Nick Ferris said the main reasons were the scarcity of aggressive fuel discounters such as Costco and Metro in the city, as well as the lack of geographical spread of such retailers, given both were located at the airport or Fyshwick.

But he said motorists were likely not getting much financial benefit if they travelled long distances to reach such service stations, and could be better served watching prices and buying at different times of the price cycle.

Mr Ferris also rejected arguments government regulated price monitoring would necessarily reduce fuel prices, saying that in other jurisdictions prices actually rose after such regulations were put in place.

He said instead, the company believed changes to planning policies to allow stations on major arterial roads, instead of the high number in suburban areas, as well as incentives and possibly subsidies for aggressive discount retailers, could help cut prices.

But the committee also questioned the motivations of a discount retailer which might enter the market with low prices, but then raise them over a period of time to be closer to the average price, thereby defeating the purpose.

Mr Ferris' colleague Chris Huth said there was always a risk of that happening, but he said many of the major retailers such as BP and Caltex were changing their model to include cafes and fresh food to become more a 'destination' service station.

Mr Huth said such retailers were doing that to differentiate themselves to the discounters and independent stations, which were trying to sell as much fuel as possible by keeping their operating costs as low as possible.

While the company had a basic analysis of Canberra's average retail fuel price margins, at 21 cents a litre compared to Sydney's five cents a litre, neither Mr Ferris nor Mr Huth said they could comment in detail on such margins, as the retailers kept such information confidential.

But they said the Australian Competition and Consumer Commission could potentially access the information through a "deep dive" into the Canberra market - a proposal ACT politicians have pushed for, but which has not been taken up.

The pair also said the ACT had further complications compared to other regional cities, being off the major highway or arterial road, and potentially higher operational costs, including an extra three cents a litre in transport costs than Sydney and higher cost of land than regional areas.

Mr Huth also said a further problem in Canberra, though the company had not analysed it, could be a higher rate of fuel cards being used by fleet vehicles, given the city is the seat of government, and those using cards were unlikely to change their behaviour even if a new retailer entered the market.

He said that giving people more price monitoring information could also help, but for as much as 60 per cent of consumers, while they might complain about the price at their local station, they kept returning to the same station, whether for convenience, or they liked the staff or other offerings.

The inquiry continues.