Sorry this is long, but is an ACCC response to my letter. I had to retype it to post it and left a few things out and abbreviated some words.
The accc is responsible for administering the Trade Practices Act 1974 (TPA). The main purpose of the TPA is to promote competition and efficiency in markets within Aus and to protect consumers from unlawful anti-competitive conduct and unlawful market practices.
Prior to 1 august 1998 the accc endorsed the maximum wholesale prices for petrol & diesel of the oil majors and established freight differentials. On that day petrol and diesel were deregulated and wholesalers are now free to set their own prices based on market conditions. However, the accc retains an informal monitoring role and closely monitors petrol and diesel prices in metropolitan areas and around 110 country towns.
Furthermore, the accc follows developments in the petroleum industry and will not hesitate to enforce the provisions of the TPA if there is evidence that it has been breached.
On 20 October 2000, the accc released a report on the movements in fuel prices – including petrol and diesel – in the September quarter 2000. That report outlined the determinants of fuel prices in Aus and discussed the factors that influenced price increases in the Sep quarter 2000.
The report notes that movements in fuel in Aus tend to follow international benchmarks. The benchmark for petrol is
the spot price for Singapore Mogas 95 Unleaded and for diesel it is a combination of
the spot price of Singapore Gasoil (80%) and Singapore Kerosene (20%) refined petroleum products.
Over the last year the benchmark for diesel has been higher than the benchmark for petrol. In Jan 2006 benchmark for diesel was over US$ 7 per barrel higher than petrol benchmark.
The report noted that unlike petrol, diesel retail prices in the metro cities do not display short-term volatility. It continued:
The commission’s 1996 inquiry in petroleum products, noted that diesel retail prices in capital cities do not display short-term volatility and commented that, unlike petrol, there appears to be no price support provided by oil majors. It also noted that wholesale price support appeared to be provided at relatively constant levels, resulting in stable retail prices in capital cities.
Other reasons why there are no price cycles for diesel in metro areas may be that the major sales of diesel are to commercial users with terms generally reflected in agreed contracts (which may include a discount on the pump price), and that most sales occur in regional areas.