Fuel Price Savings: Not as Spectacular as Claimed

It’s not often a week can go by without the price of fuel appearing in the news for one reason or another.

Recently RACQ reported that, since the introduction of the Government scheme requiring all service stations to release prices to the public, Queenslanders have saved over $122 million on fuel.

The difficulty of presenting this figure to the public is that it cannot be verified as solely based on the introduction of the government scheme. It also does not present the whole picture. When comparing the savings of a market such as Brisbane to the savings of over $40 million, it equates to less than 60c a week savings for each registered vehicle in the area.

However, this is not an argument against price transparency. This is important for any efficient and properly working market and has been the reason MotorMouth has been providing motorists with information to help save them money for nearly 20 years. 

There are so many variables that impact the price of fuel (wholesale prices, currency fluctuations, competitive intensity and so on) thatit is difficult to know precisely what causes prices to go up or go down. In the latest quarterly report from ACCC largely attributed the lower gross margins in Brisbane to a 12% increase in retail sites, bringing greater competition to the market.

A recent ACAPMA survey tells us that the reality is 87% of motorists purchase from the same or one of a few service stations and that price is an important part of the purchase decision but so are a number of other factors such as convenience and loyalty programs. 

We have seen contracted retailer margins in a number of interstate markets without regulated price transparency recently, which makes us question whether any lower margins in Queensland can be attributed to regulation.

For more information on the claims and the MotorMouth interpretation of the release, see the following clip from 10 News.

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