ACCC study finds petrol prices lowest in 22 years

Average retail petrol prices in 2020–21 in Australia’s five largest cities were the lowest in 22 years in real inflation-adjusted terms, according to the Australian Competition and Consumer Commission’s latest petrol monitoring report.

The report looks at Australian petrol prices in the 2020–21 financial year and the June quarter 2021.

Annual average retail prices in 2020–21 in Sydney, Melbourne, Brisbane, Adelaide and Perth were 129.7 cents per litre (cpl), a decrease of 4.9 cpl from 2019–20 (134.6 cpl).

In real terms, the last time annual average retail prices were lower than this was in 1998–99 when they were 115.0 cpl.

“Low average petrol prices in the last financial year have come after prices reached record lows around the onset of the COVID-19 pandemic,” ACCC Chair Rod Sims said.

In 2020–21, taxes were the largest component of the price of petrol in the 5 largest cities, and greater than the cost of refined petrol.

Taxes accounted for 42 per cent of the price, while the international price of refined petrol accounted for 39 per cent.

The COVID-19 restrictions on travel and economic activity in Australia imposed in mid-March 2020 meant that there was significantly less petrol purchased from retail sites.

In 2020–21, annual petrol sales volumes were around 11 per cent lower than in 2018–19, before the impact of COVID-19.

“The pandemic has had an enormous impact on demand for petrol in Australia, going back to March last year and this has influenced retail prices and gross retail margins,” Sims said.

Movements in Australia’s retail petrol prices largely mirror movements in international refined petrol prices, which generally follow international crude oil prices.

The major influences on crude oil prices in the past year were agreements made by the Organisation of the Petroleum Exporting Countries (OPEC) cartel and other crude oil producing countries to cut crude oil production, and the impact on demand of the COVID-19 pandemic.

“Australian petrol prices reflect international refined petrol prices so when prices go up in the Asia Pacific region, motorists in Australia pay more for fuel,” Mr Sims said.

In 2020–21, average petrol prices across the more than 190 regional locations monitored by the ACCC were 127.6 cpl, which was 2.1 cpl lower than average prices in the 5 largest cities (129.7 cpl).

“Historically, regional Australians have paid more for petrol than motorists in the five largest cities, so four consecutive quarters of lower prices in the regions is significant,” Sims said.

“Possible reasons for this include fewer lockdowns in the regions, and regional retail petrol prices reacting slower to international price increases as a result of lower volume turnover.”

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