Darwin petrol prices coming under ACCC spotlight

The Australian Competition and Consumer Commission (ACCC) has chosen the first regional location to be studied as part of the petrol monitoring arrangements launched in December 2014.

Darwin petrol prices will be the focus of the first regional study, which will be focusing on identifying and explaining why prices are higher in some regional areas than those in big cities.

ACCC Chairman Rod Sims said Darwin had some of the highest petrol prices in Australia, registering around 170 cents per litre (cpl) in 2013-2014. This was almost 20 cpl higher than Australia’s five major cities.

“Petrol prices in Darwin are consistently higher than in Katherine, which is far smaller and more than three hundred kilometres inland. Furthermore the differential between Darwin prices and prices in the five largest capital cities has increased in recent years,” Mr Sims said.

“The ACCC receives many complaints from across Australia that petrol prices are too high, and are priced well above cost. Some then argue for some form of ACCC action. However the ACCC has a price monitoring role, not a price setting role, and pricing above cost is not against the law for petrol or any other consumer good.”

Two more regional areas will be studied by the end of the year, with both expected to be announced in the next few months.

Mr Sims said, while micro level monitoring has been done in the past in order to explain price drivers, the new direction will examine price drivers at a local level.

“We see three potential benefits from these ‘deep dive’ regional market studies. First, simply providing greater transparency will empower. Second, we could make recommendations for change to some tier of government. Third, we may find a breach of the Competition and Consumer Act that was not otherwise apparent,” Mr Sims said.

“To understand why petrol prices are so high we need deep and detailed information about every step of the supply chain. Gathering and analysing this complex data will take considerable time.”

The first round of major fuel companies in Darwin are being sent out notices, with more requests for information expected to be sent in the next few weeks.

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