Jan 162007

Amid the lowest world oil prices in 20 months, an investigation has found petrol retailers have not passed any of the relief on to consumers.

Herald Sun.

Bannerman is stunned, nay, shocked to read that oil majors haven’t been treating consumers honestly these last several months….years….decades. 

Apparently, someone has prodded Graeme Samuel out of his self-imposed state of denial over this rorting of consumers, and he’s now making noises about revealing all unless petrol prices drop at least $0.10/litre by weeks end. Bannerman would love to see the results of this supposed ‘investigation’.

Now, it’s understood that the major refiners have, for a long time now, pleaded their case in the fuel rort stakes. Each has detailed explanatory mumbo-jumbo on their websites claiming a self-protective rationale for fuel pricing in Australia, but if you’re of a similar mind to the Bannerman, you’ll either not understand it, or simply not believe it. Bannerman takes both tacks. Why should industry majors with a monopoly position need to tell anyone the truth about any aspect of their industry, if the legislative power to force them to do so simply doesn’t exist? The Australian Competition and Consumer Commission (ACCC) doesn’t have that legislative backing, and while Samuel might bark occasionally, he has absolutely no bite. He rests on that fact in the same manner which Pilot washed his hands of jewish blood.

So, we understand that the Tapis benchmark trading price for oil, (based upon a convoluted equation for calculating the marker price of oil traded through Singapore from the Tapis oil fields in Malaysia – don’t ask Bannerman. Go Google it!) is also the basis for Australian petroleum prices at the bowser. Australian oil and gas exploration, extraction and refinement provides just under 65% of the nations requirements, as at August 2006. Of course, production is slowly falling away globally, as the world’s reserves of black gold start to run out, as well as demand being always on the increase, however, we do manage to provide pretty much for ourselves. Oil and gas exploration, research, and refinement is expensive, no-one doubts that, however, if one chooses to indulge in a given investment, one accepts the risks. Like throwing one’s chips onto a roulette table, one expects the dealer to be scrupulous and not be activating a balance mechanism in the house’s favour under the table. Similarly it is with consumers purchasing petroleum products. We, the consumer, expect to be treated honestly and with intellectual respect. Sadly, reader, that hasn’t been happening, is it?

Bannerman refers the reader to the first graph on the Australian Institute of Petroleum website pricing page for December 2006-January 2007. Don’t bother with the explanatory gibber, just note the following:

  • A$ exchange rate movements;
  • Crude oil price movements – presumably Tapis pricing;
  • Unleaded petrol pricing, particularly over the periods 19 to 22 December and 11 to 15 January;
  • A steadily reducing retail price for distillate (diesel) in comparison to unleaded petrol over the entire period.

Bannerman finds the comparative prices for distillate and petrol to be fascinating. Granted, supposedly petrol is more expensive than distillate to refine, coming further along the catalytic reaction chain, but if that is so, why is distillate so much more expensive than petrol 99.9% of the time at the bowser? Is this yet another great mystery of life? Anyway, as one can clearly see from this crude (no pun) graphical representation by a vested source, gouging of the consumer was clearly taking place just prior to Christmas and over the last several days in comparison to relative crude oil prices. This is despite the lowest A$ exchange rate in the past 12 months. This is only one small example.

Bannerman could quite easily go on, but it should be clear to the reader by now, especially if the reader owns a vehicle which runs on fossil fuels, that the entire fuel pricing scenario has been deliberately muddied by the refiners to the point where they can make whatever claims they like in support of the prices they wish to charge, and get clean away with gouging the consumer because the consumer can’t accurately argue a case against. There is no supporting mechanism for the consumer, as the ACCC has no power to act in regulating fuel prices. There remains unaddressed the powerful sub-sector of the fuel industry occupied by the grocery retailers, Woolworths and Coles, who have both climbed into bed with Caltex and Shell respectively. Cheaper fuel at the bowser for those who buy from the respective grocers is a pure and simple con-job. Noticed how the co-branded stations have recently returned to the branding of the associated refiner? That jig is up because of the attention focussed upon the particular rort in mid 2006. Nothing in this corporately controlled consumer world is ever cheaper if you buy something else from an associate. Woolies will NOT sell you groceries without markup just so you can save $0.03/l at the Caltex out back in the parking lot. If you haven’t figured that one out, reader, you likely never will.

Now, don’t get the Bannerman wrong. He welcomes any investigation into the way oil majors conduct their business in this country. The setting of fuel prices in Australia has been far too monopolised in favour of the refiners for far too long now. This should, and must change. Oil, and associated fossil fuels, are a dwindling resource, but does that automatically mean those of us who must use them need to pay whatever the refiners and explorers decide? Free market forces should certainly be allowed to hold sway, but that’s only if the market is ‘free’. In this country, it’s clearly not. There is collusion occurring between refiners. There must be, else we’d be seeing dramatically different pricing between company-owned outlets. We don’t. For the ACCC to be in a position to do anything about consumer gouging by these monopolistic giants, government MUST come to the fore. It’s fine and well for Howard, et al, to claim that nothing can be done about the price of fuel, but government makes the rules, and more specifically, government reaps the taxes. $0.38 from every litre we buy goes into government coffers. The single greatest source of revenue, streets ahead of any other form of tax or excise. Bannerman has a vehicle which holds 60 litres. To fill it costs, as at the last fill, $67.74. Of that sum, $26.00 goes straight to the government purse. Bannerman pays his taxes, and then some. He sees no valid rationale behind the fuel price excise. If someone can offer a valid explanation, he’d like to read it.

Bannerman awaits the 22 January, by which time Graeme Samuel should be ready to make “some fairly vigorous public comments and seeking answers”. How he intends to do that, successfully and with any benefit to the consumers he answers to, remains a mystery. Bannerman is somewhat breathless with anticipation.

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