New discount fuel-buying group

Submitted: Sunday, Jun 08, 2014 at 12:17
ThreadID: 108172 Views:2533 Replies:8 FollowUps:14
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G'day, all - I've just discovered this new discount fuel-buying group, that has formed -

One Big Switch

The principle is that once the group reaches a critical mass, they negotiate a discount with a particular seller/brand/chain that gives the member a 7.5c L discount - but only via a prepaid card.

You can select the amount you prepay on the card and it appears it can be as small as $100.
I can't see this scheme being much use when you're travelling long-distance, or living in a remote area - but I can see where it could deliver some gains to people living in the heavily-populated areas.

I have a sneaking suspicion we are being taken for a ride by the oil companies and the major fuel chains. There's two things that interest me -

1. Discounted fuel prices always conveniently end up within 0.1c of each other on "discount days" - thus making one suspicious that price-fixing is in place. It would be interesting to run a computer program on the pricing to see if it picked up signs of collusion.
Australia is the land of price-fixing, just look at Visy and Pratts cardboard-box price-fixing scheme, that cost us all heaps, and which unjustly enriched Visy and Pratt.

2. High cost Australian refineries now play little part in our fuel refining. They're all gradually being closed down. They're not only high labour cost - they're old, and they're inefficient. Kwinana was built in 1954, and it's the newest of our refineries.
Probably 40 or 50% of our ready-refined fuel (refined to Aust Standards), now comes directly from Asian refineries - mostly Singapore - and these are low-cost, highly efficient refineries, that supply refined fuel to Australian oil companies, with a very high profit margin for those companies - despite the shipping costs.

As a result, I reckon we're paying probably 10 or 15c more per litre for our fuel than we should be - if there was some real competition - and much more scrutiny of price-fixing schemes between the "majors".
ASIC has no money, and no teeth to chase up fuel price-fixing - and we're being shafted left right and centre by these majors, who wouldn't know what real competition was, if it hit them in the face.
As a result, I'm happy to support a buying group such as the One Big Switch to see if we can get some decent discounts on fuel pricing. The more people join OBS, the greater their purchasing leverage.

Cheers, Ron.
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Reply By: Motherhen - Sunday, Jun 08, 2014 at 18:37

Sunday, Jun 08, 2014 at 18:37
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.

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Reply By: Member - string - Sunday, Jun 08, 2014 at 19:01

Sunday, Jun 08, 2014 at 19:01
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 !!
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Follow Up By: Ron N - Sunday, Jun 08, 2014 at 20:36

Sunday, Jun 08, 2014 at 20:36
String, the oil companies operate on the same basis as Coles and Woolies - they charge what they think the locals are capable of paying.

Thus we have Coles and Woolies charging different prices for the same item between rich and poor suburbs. Fuel is no different.

It's no secret that average wages are higher in Canberra than in Sydney or Melbourne (ABS facts).

If you happen to be one of the "working poor" in a wealthy area, then you have little hope of cheap prices for anything.

It's well known that tradesman add on extra to rates in wealthy suburbs, regardless of the customers actual wealth position.
So it doesn't pay to be a pensioner or a "battler" in a wealthy suburb!
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Reply By: Mick T3 - Sunday, Jun 08, 2014 at 19:02

Sunday, Jun 08, 2014 at 19:02
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.
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Follow Up By: rocco2010 - Sunday, Jun 08, 2014 at 19:58

Sunday, Jun 08, 2014 at 19:58
Gidday

How does the diesel get to Broome? Is it delivered direct by ship or by truck from Darwin or Perth? If if is the latter that would explain the pricing.

Cheers
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Follow Up By: Ron N - Sunday, Jun 08, 2014 at 20:30

Sunday, Jun 08, 2014 at 20:30
Rocco2010 - Refined petrol and diesel is shipped directly into the Broome terminal from Asia.

There are 64 terminals around Australia, and 55 are capable of taking overseas shipments.
Of those 55 terminals, 46 are owned outright by the "majors" (Caltex, Shell, BP and Exxon-Mobil - referred to as "marketer-refiners), and 4 more are controlled by the "majors" via leases.

The comprehensive report below makes an unambigious statement that the petroleum fuel industry in Australia is controlled by those 4 "majors".

Petroleum Import Infrastructure in Australia
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Reply By: Member - Silverchrome - Sunday, Jun 08, 2014 at 21:46

Sunday, Jun 08, 2014 at 21:46
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
AnswerID: 534042

Follow Up By: Ron N - Sunday, Jun 08, 2014 at 22:40

Sunday, Jun 08, 2014 at 22:40
Silverchrome - You're right on all points. I did mean to put ACCC and the brain wasn't in gear when I typed it up.
Yes, they are pretty useless when it comes to going in to bat for the consumer.
However, a lot of companies are very devious when it comes to indulging in anti-competitive behaviour.
They know all the ropes, and they know the ACCC only launches action when there's blatant misbehaviour.

I've been in the boardrooms of some big companies and I was appalled at the behaviour of many directors.
They seem to operate with impunity, wielding such power that they can cow politicians, public servants and regulatory authorities.
Many of these authorities are already bogged down with very basic enforcement and they never have enough funding to launch major prosecutions.

Re the solar feed-in tariffs - well, that has been a political football for years, and dependent on individual states regulations, agreements and contracts.

I can't speak for the other states, but in W.A., the feed-in tariff was originally set at 40c - then the cost of this subsidy (which is what it is) blew out from $50M to to $250M as everyone jumped on the bandwagon and installed solar panels. Of course, the W.A. Govt only budgeted $50M, so it became a huge elephant in the room.

The Govt tried to cancel the deal - but everyone who had installed panels had already signed 10 yr contracts, so it wasn't such an easy task to rescind the deals already signed.

The W.A.Govt backed down quickly when it became obvious there was a massive upsurge of anger (and possible class actions for breach of contract) - and the 40c feed in tariff stayed. However, all new installations only get 8c for the tariff.
I know some people who are making a lot of money from this early and undoubtedly too-generous feed-in tariff deal - but a contract is a contract, so good luck to them.
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Reply By: Les PK Ranger - Monday, Jun 09, 2014 at 08:44

Monday, Jun 09, 2014 at 08:44
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.
AnswerID: 534054

Follow Up By: deserter - Monday, Jun 09, 2014 at 09:26

Monday, Jun 09, 2014 at 09:26
Yep - you might get the 7.5 discount - but off what price? They will just keep the lower weekly price a bit higher for a few weeks. Nevertheless - I have signed up lol.
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Follow Up By: Les PK Ranger - Monday, Jun 09, 2014 at 09:40

Monday, Jun 09, 2014 at 09:40
Yeah mate, suppose why I might have to eventually sign up too :/
Otherwise those that don't end up paying those inflated prices . . .
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Follow Up By: Member - Grundle (WA) - Wednesday, Jun 11, 2014 at 18:52

Wednesday, Jun 11, 2014 at 18:52
Yes had the same outcome on the big insurance switch,all it did was give one company the cream of 100'000 customers. Their offer for my area was $129 more than what i was paying already and i lost my bonuses.No thanks

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Reply By: Freshstart - Monday, Jun 09, 2014 at 09:36

Monday, Jun 09, 2014 at 09:36
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.
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Follow Up By: Les PK Ranger - Monday, Jun 09, 2014 at 09:46

Monday, Jun 09, 2014 at 09:46
I too use the wifes Getz around town as much as possible (low 7's / 100 :)). . . so too use the discount vouchers for diesel fills.
Will also buy a couple of drinks and get the extra discount, as I always put at least 150lt into the tanks when filling, makes for $12 off at least.

Yes, best drive with very light right foot, best way to keep $$ in your pocket and not fuel coys.
Yep, we Aussies are very used to paying what the market will bear, for everything !

$4 a litre ?
Where you headed ?
OS somewhere I expect ?
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Follow Up By: Freshstart - Monday, Jun 09, 2014 at 09:58

Monday, Jun 09, 2014 at 09:58
Definitelt not overseas mate. I don't like big cattle carrying cruise ships, I am not supposed to fly and I can't afford a boat like Greg Normans monster, nor even his little pleasure craft. And besides, we are more interested in this "wide brown land" than anywhere else.

It's the last item on my bucket list and may not get another chance. I am sure that, with a little hindsight, you will work it out. We also don't want to say when the house is empty.
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Follow Up By: Les PK Ranger - Monday, Jun 09, 2014 at 10:46

Monday, Jun 09, 2014 at 10:46
Was just curious re near $4 / lt, expecting it may be very remote WA or NT ?
Places I am yet to get too.

I would have thought pricing for even remote cattle property type access would be around $3 / lt or so ? Perhaps not.
Still, it may only be one or two of those type of places needed for most travelling through such as area.
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Follow Up By: Freshstart - Monday, Jun 09, 2014 at 11:02

Monday, Jun 09, 2014 at 11:02
Sorry Les. I thought that you had been there. The Canning Stock Route mate.
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Follow Up By: Ron N - Monday, Jun 09, 2014 at 12:54

Monday, Jun 09, 2014 at 12:54
QUOTE - "Profits affect shares which affect superannuation and taxes thus also the pensions."

Yes, perhaps - but the oil companies also ensure the pensions of their own, are looked after first!

Exxon boss gets $400M retirement package
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Follow Up By: Freshstart - Monday, Jun 09, 2014 at 13:40

Monday, Jun 09, 2014 at 13:40
Why shouldn't they. If they don't look after their own then investors will go else where.

We are a capitalistic society after all. Next time you want a pay rise, nothing wrong with that, and get what you can, just remember that the bosses/directors will not want it to come out of their pocket/s so they will want to make more sales or bump up the price to pay for your rise. It's a big wheel that will forever not catch up to it's tail.

And then we buy offshore (caravans, good from overseas and not home grown) so the company either goes bust or puts people off because the last thing I want as a shareholder is to lose my superannuation and thus my brand new 200 series that I have ordered.

An evil wheel, but necessary if we want the great Australian dream.
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Reply By: The Landy - Wednesday, Jun 11, 2014 at 19:08

Wednesday, Jun 11, 2014 at 19:08
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...
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Reply By: The Landy - Thursday, Jun 12, 2014 at 09:36

Thursday, Jun 12, 2014 at 09:36
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…
AnswerID: 534231

Follow Up By: Nargun51 - Thursday, Jun 12, 2014 at 10:55

Thursday, Jun 12, 2014 at 10:55
I suppose there are three questions: who’s running it, who’s financing it and how are they going to make a profit?

Cynical me, and in the absence of any research, but a supermarket chain that has been hauled over the coals by ACCC for excessive fuel discounting, the implementation of a loyalty program is a way of circumventing any agreements that that may exist with the ACCC about fuel discounting.

Being pre-paid, the risk is only on the consumer and the operators can also play the short term money market.

Win/win for the supermarket chain.

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