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And this is how a discounting cycle commences and it usually ends when the price support is withdrawn.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…
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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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