New discount fuel-buying group

Mining companies probably negotiate a deal with the company offering the best price, so why not other buying groups?

Our son used to belong to a local buying group when farming in the Great Southern. The group sought tenders from the fuel outlets servicing their area and took the one offering the best price; this was on bulk fuel delivered to the farms. They did similar with other expensive purchases such as chemicals.

Motherhen

Thanks Ron.
I've given up looking and hoping for a fair deal from fuel suppliers, we pay av average of 15c/16c per litre above average Sydney prices for petrol in the Canberra (2620) area. These companies lack any integrity, let alone honesty. Love the theory of "one big Switch " but if it works, it will only be a matter of time before they are bought out, and up prices go again.
Perhaps, one way to stop these thieves would be for (hopefully,) every motorist to participate in a "national dry day" or week, that targets a specific brand of fuel to stay away from. If what they say is true, ie they work on minute profit margins, then it might force them to be fair. Ha Ha !!
String

RAA is SA offered Woolworths $100 cards for $95. That is close to ten cents a litre off.

When you combine this with the four cent discount, and maybe another discount, then things look relatively good.

What I can't figure out is why diesel costs more in Broome than in Adelaide when doesn't the stuff come from Singapore?

Please correct me if I'm wrong.

Hi Ron,

You mentioned ASIC but I think you mean ACCC…the so called consumer watchdog. The ACCC is completely useless and a complete waste of tax payers money IMO. All they do is continually bully Telstra because it’s an easy and newsworthy target. But it ignores the big issues (and costs) such as anti-competitive behaviour in fuel distribution, high electricity costs, inequity in solar feed-in tariffs (some consumers get 10c/kw and some get 44c/kw), non competitive (and expensive) household water distribution, high local Government rates etc etc. There are many big consumer issues they could tackle but it’s all too hard.
Cheers

I don't have much faith in the One Big Switch campaigns.
When the electricity plans came out, I found the rates from the offer company were still a cent / kw hr more after their supposedly generous discount, than I was getting from the main supplier here is SA.
Always ask, % off what ?

All this OBS campaign will do is what the supermarket discounts vouchers do, drive UP the base price for everyone, so the greedy Fuel / grocery coys can keep their profits and shareholders happy.
Then, there's no choice but for everyone to use those bl00dy vouchers to get a little fairer price.

We have a couple of rules we try to follow for fuel.

Use the town car as much as possible. Try to use whatever discount that we can get for the 4WD as diesel is dearer than ULP. Always fill up in Sydney upon leaving and try not to fill up on the way into Sydney.

That's fine for around town but for the bush we just take what's on offer when fuel is needed. It's almost $4 a litre where we go for the next trip and we are prepared for it.

Drive with a rich red tomato under the right foot. Got 11.3 L/100 last week on a return trip to Sydney. Best for years. Took the roof top tent and roof rack off to save fuel but didn't expect 11.3c. You beauty! Was almost 17 L/100 last time.

You will never beat the companies. They are just trying to make money, just as we all are. Profits affect shares which affect superannuation and taxes thus also the pensions.

There is no money in refining fuel that is why we are losing the refineries in Australia, it is a high volume low margin business.

And there isn't any "real" money in selling it either. Why do you think people like Seven eleven bought many of the Mobil outlets, it is to sell you the coke, chips and chocolate bars when you pay for your fuel.. Much the same reason woollies and Coles give you discounts they make money in their stores...not at the bowser...

Ron

A couple of comments on the issues you raise in point 1 & 2.

Fuel company pricing and collusion has been done to death in Australia, a bit like “Saving the Koala” (as well intentioned as that might be) by any number of authorities and despite this there has not been any evidence of collusion at a Corporate level. There have been some instances of individual operators engaging in the activity at a localised level and they have been prosecuted, as they should be.

And whilst seemingly there are always comments about politicians’ being “in the pocket” of the fuel companies, any politician that could produce evidence of collusion between fuel companies and “hang them out to dry” would do so in an instant as it would make them the darling of the electorate, something they all aspire to – it is telling none have ever been able to achieve this…

The second tier parties like the Greens, for instance, wouldn’t be holding back when it comes to fuel companies and collusion, and I’m betting they have put the fine tooth comb over the issue on more than one occasion!

Fuel is a highly commoditised product, consumers are indifferent (mostly) to which brand they use. If one local service station reduces prices with the support of its fuel supplier other retailers in the area are faced with two choices, reduce and match their prices or sell no fuel – it is as simple as that.

And this is how a discounting cycle commences and it usually ends when the price support is withdrawn. Much has been written about this, so little point me delving much further into it here, other than to highlight this is actually competition at work leading to lower prices for consumers. Its removal would actually mean consumers would be paying full price each and every day!

On the high cost of Australian Refineries – this is very true; they cannot compete with the efficiencies of the larger Asian refineries. This is why Caltex is exiting fuel refining in Australia and becoming a distributor only. The other fuel refiners can’t shut their Australian refineries fast enough.

But I will challenge you to produce the evidence to back the claim that fuel supplied by Asian refineries to Australian fuel distributors is done with a very high profit margin for the local importers – there is simply no evidence to support this assertion. A cursory glance of how prices are calculated confirms this.

And here is an observation that others may also have made. Most service stations these days look like a convenience store with petrol pumps out the front, not the other way around like it used to be. And the reason is simple, there is more profit margins in selling you the can of coke, packet of chips, and the two-for-one chocolates, then there is in selling you a tank of fuel. Why else would the Seven-Eleven convenience stores purchase many of the Mobil fuel outlets when they were offered for sale?

On “One Big Switch”.

Perhaps this is something that might be useful. Although there appears to be little detail on how it would actually run, and I suspect that you will be handing cash over on a prepaid basis, potentially becoming an unsecured creditor to the scheme – and that isn’t without risk. So we’ll need to wait and see what terms and conditions are applied if it gets off the ground.

There are many ways to save money on fuel purchases, either directly or indirectly. Coles and Woolworth’s already have discounting schemes, pay by credit card and other benefits accrue. But even more directly, take your foot off the accelerator, make sure the tyres are inflated correctly, regular servicing, avoiding peak hour traffic (if you can) to name but a few…

But importantly, buy at the low point of the pricing cycle – this one factor alone will most likely save you more than 7.5 cents per litre without taking account on the other factors I have highlighted, and requires little more than being diligent with your fuel purchases.

All food for thought and of course we all want to save where we can; so good luck out there in the rat race…