Australia's three great petrol rip-offs, and what can be done to fix them

AUSTRALIANS are getting “ripped off big time” and are paying hundreds of millions of dollars more than they should for petrol.

Speaking to 3AW’s Neil Mitchell this morning, Australian Competition and Consumer Commission chairman Rod Sims said there were “three forms of rip-off” persistently driving up petrol prices.

“The main one is that 50 per cent of the cost of petrol is the overseas cost of crude oil, and getting it here,” Mr Sims said.

“Unfortunately, we’ve got an overseas cartel from the oil producing nations. You know, the Middle East, Russia, countries in Africa. And they get together and control how much fuel gets sold on the world stage, and that pushes the price up enormously.”

Mr Sims said that reason alone accounted for an “easy 10 to 20 cents per litre”, though it was hard to calculate an exact figure.

Worse, there is practically nothing Australia can do about it.

“We would love to be able to do something about that, but it’s all run by governments,” he admitted.

The second rip-off, however, is far easier to fix, because it is caused by our own government.

“Thirty-five per cent of what you pay is tax. And you’ve got to say, why are we paying basically a fuel excise of 41 cents on top of the GST?” Mr Sims asked.

“The complication there is it’s actually there to fund the roads that governments build, but the link is so poor, you have no idea whether this level of taxation is the right one to fund the roads or not.

“The answer on tax is let’s work out how much we’re spending on roads, how much we want to spend on roads, and raise the money to do that so that motorists know firstly, the tax they’re paying is going to fund the roads, and secondly, they’re not paying a cent more than they should.”

Finally, Mr Sims said petrol companies were gouging drivers by charging them at least a couple of cents more than necessary.

“In our view, margins are two to three cents a litre too high. That’s $400-600 million. That’s a lot of money for Australian motorists,” he said.

While annoying, the companies’ conduct is not illegal, so the ACCC is unable to step in.

“It’s not against the law for someone to overcharge for a good,” Mr Sims said.

“If I buy an apple off you for one dollar, Neil, and then sell it to someone else for 10 bucks, that’s not against the law.”

He urged drivers to shop around, particularly at independent petrol stations, and buy at the right time to avoid being overcharged.

“We know that Coles, BP and Caltex are more expensive than the independents, and it’s the same fuel. So don’t worry about buying off independents, it’s the same fuel coming from the same tank,” he said.

“The only thing I can suggest is, if customers, if drivers shop around a bit more, there are variations.

“What motorists can do is work out when to buy, because those prices fluctuate.

“When prices are at the bottom of the cycle, you’re probably getting petrol below cost. And when they’re at the top of the cycle, you’re getting ripped off big time.”

There are several apps and websites that can tell you where petrol prices are cheapest at any given time, such as FuelWatch, FuelCheck in NSW, MyFuel in the Northern Territory, Motormouth and GasBuddy.

You can also save a couple of cents per litre by closely following the price cycles in your area. The ACCC itself has made that data available.

If you can’t avoid peaks in the cycle altogether, you could at least fill up as little as possible when the price is high and wait to do a whole tank when it falls.

By actively seeking out the lowest prices, Mr Sims said, motorists could “inject competition to the system and hopefully bring those prices down”.

But ultimately, 85 per cent of the problem is completely out of customers’ control.

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