AnswerID: 345668 Submitted: Friday, Jan 23, 2009 at 16:36
The Landy
replied:
Paul, with all due respect to you and your viewpoint, I want to note a couple of points.
The Terminal
Gate Price (TGP) for ULP on Tuesday in
Melbourne was 104.53 cents per litre, so if you were buying it for 96.5 cents per litre you should be pleased, because it was below the wholesale price; that is the price that retailers pay for it (and replacement cost). In fact the TGP has averaged 105.47 cents per litre in
Melbourne this week.
The fact you were buying it below the wholesale cost is probably as a consequence of the discounting cycle.
Today’s TGP in
Melbourne is 109.8 cents per litre, so at 119.5 cents per litre this represents approximately a 10 cent difference. Take into account the cost of freight and insurance from the terminal to the retailer, add in a retailer margin and the price looks reasonable. After all, the retailers, who are mostly businesses operated independently of the major fuel companies (despite external branding), should be entitled to earn a living otherwise the would probably close up
shop…
It is also worth noting that the spread between ULP and diesel has closed considerably; one of the reasons it has been wider in recent times has been the heavy discounting of ULP and I discussed this in a recent in a blog.
Another point worth making is you can’t look at the price of a barrel of oil on any given day and translate its movements into expected movements for refined products on that day. There are many influences that dictate the movement of both, and independently of each other.
The Australian dollar is trading at 0.6500 cents presently, and its average opening price in
Australia this week has been 0.6620 cents, nowhere near 0.6800 cents.
You can goad politicians and the ACCC into acting, but on what? There does not appear to be anything untoward about the pricing today or this week. The problem about complaining to politicians’ about something they can’t fix or have any control over means they will try and placate the masses by the introduction of superficial (and inappropriate) remedies. FuelWatch is a great example of this. Under FuelWatch you probably would not have had the opportunity to purchase fuel as cheap as the price you describe this week.
In fact, about the only thing any government in
Australia can do to provide relief on
fuel prices is to change the taxes and excises they impose. But that would open discussions on how it would be funded.
I’m not here to defend the fuel companies, they’re big enough to do it themselves; but it is important to get the facts and arguments right if taking a shot at either the, Government, ACCC, or the fuel companies otherwise the arguments will be dismissed by these groups as mere uniformed ranting rather than informed discussion.
Off my soapbox….but I’m like a dog with a bone when it comes to discussing
fuel prices….
Cheers, and enjoy the long weekend………
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Reply 3 of 8
FollowupID: 613672 Submitted:
Friday, Jan 23, 2009 at 21:53
Bytemrk posted:
There is no question that 10c per litre between TGP and retail is quite fair, particularly when you take into account all the factors you mention.
I also agree many of the independent operators get a bad rap.. when it's not always justified.
But who sets the terminal
gate price?.... The Oil companies....that's right the profiteering happens before that price is set.
It's getting a bit hot to make big profits at the retail level... so you bury it further back in the process, quite simple really.
I agree people can't compare same day moves in Singapore Tapis pricing either, But it is currently selling at prices similar to early 2004! - I don't remember my diesel costing over $1.20 a litre back then.. Yes costs have gone up... but not enough to justify what goes on today.
There is no possible justification for the prices we are currently paying.
The big oil companies continue to shaft us all.. and we don't have much choice but to line up and bend over @@..
Mark
FollowUp 1 of 3
FollowupID: 613952 Submitted:
Monday, Jan 26, 2009 at 08:02
The Landy posted:
Hi Mark
The TGP is set with reference to some very transparent price inputs. Any discrepancy or deviation from the 'norm' would be very visible and contestable.
Many talk about being 'shafted' by the fuel companies. But ask yourself, who is doing the real 'shafting'? Refiners have invested significant amounts of capital (billions) so we can conveniently pull up at any service station and fuel our vehicles. The industry is a significant employer and generates taxable income for the Australian Government. For that they earn around 1 cent per litre of fuel refined. Less than 1% based on the current price.
In significant contrast, the Australian Government is paid just over 38 cents in excises and has a GST on retail fuel purchases. Based on the excise alone this represents around 38% of the current price of fuel. And remember, the excise is a ‘fixed’ amount so if, and when
fuel prices fall the actual percentage that it rakes from your wallet increases.
So who is the real villain here? .....mind you if the Government did drop taxes on fuel they would need to raise the money somewhere else. As was noted by Footloose elsewhere in this thread, we’d all do better to make the government account for the way it spends the money it generates from the fuel excise, rather than wasting time criticising fuel companies for wanting a (meager) return on their investment.
I’ve said before the greater risk to fuel retailing in
Australia is supply, not price, if the refiners dont generate a return sufficient to support the business then they will leave. You only need to look at Port Stanvac in
South Australia as an example….
Take care, and enjoy the rest of the weekend.
The Landy
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FollowUp 2 of 3
