Sep 052007

If this isn’t price fixing, collusion and gouging, then perhaps we’d better have Messrs Oxford and Webster redefine just what those particular words mean.

I’ve still yet to hear, coming from this inquiry, a valid rationale for the necessity of a ‘price cycle’. Fuel imports and exports (LNG for example) are all bought & sold on hedge contracts on international futures exchanges. The price of TAPIS crude oil, or any other crude oil or refined petrol or whatever basis for pricing suits the refiners to trot out on any given day, doesn’t fluctuate sufficiently to account for $0.15/litre price movements over a seven day period. Neither has the A$ moved sufficiently either up or down against the US$ to warrant such movements. In fact, it’s interesting to note that during the peak of negative market activity over the recent US sub-prime mortgage fallout, the price cycle of petrol never changed. Here in Brisbane, the price cycled from a low of $1.03 to a high of $1.21 per litre. I filled this morning at $1.03/l. I can guarantee by this evening as I drive past the local Caltex, E10 will be selling for around $1.18/l.
It’s not only Caltex which follows this cyclic pattern for retail pricing of petrol. It’s every single retail petrol outlet. Clearly, the refiners call the tune and no single refiner wants to forgo profits by undercutting the others, just as no single refiner wants to look the odd one out by raising terminal gate prices. This is collusion, whether it’s done around a board room table with the minute takers sent outside for coffee, or as we’re told during this enquiry, as some form of telepathic, tacit understanding between the players. That Caltex admits to attempting to force a competitor to raise prices simply says to me that a fix of sorts is in, and has been in for a long time now.
Should supermarket giants have been allowed to play outside their normal sphere of influence? Well, under the capitalist system, no-one would have been game to stop them. Money makes money and carries with it a lot of power. It also engenders greed, as displayed by Coles in attempting to garner more market share by undercutting it’s competitor. Such activity seems futile to me, as a consumer. I’ll buy where the fuel is cheapest. I couldn’t give a rats rectum whether Coles sell cheap this week and Woolies next. I’ll hardly keep buying at Coles on the off-chance that they’ll be the cheapest next week. Actually, I’ve never bought fuel at a grocery chain outlet, but the rationale holds true, regardless. There’s something offensive and faintly tainted about filling your car at a grocers checkout, so to speak.
No, dear reader, I have maintained for yonks now, and written in this tome about it as well, that we motorists are being ripped off to the max by a collusive cabal headed up by the major fuel refiners. Add to that rip-off the much hated petrol excise and the tax-on-a-tax GST and I’d suggest that government itself has been waist deep in this particular cesspit to some degree or other as well. We’re told the consumer makes the market go around by creating and removing demand. Nice theory, which only works when competition exists. Clearly, there’s no competition in the fuel market.

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