No such thing as "Collusion".

Submitted: Tuesday, May 10, 2011 at 07:25
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Would someone like to explain to me the mathematics of being able to transport a load of Petrol from Brisbane up the Range to Toowoomba and sell it cheaper than in Brisbane & the Gold Coast. The concensus is that there is more competition from the "hundreds" of Service Stns up there to the "relatively" few on the coast, thus the difference. Oh Yeh ! I believe that ! When I used to frequently travel to Toowoomba you always bought your fuel at the Service Stn's on the way up or back such as Rusty's as it was always too expensive at the top of the Range. So is the ACCC really a toothless Tiger or am I missing the plot !
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Reply By: Ozhumvee - Tuesday, May 10, 2011 at 07:42

Tuesday, May 10, 2011 at 07:42
That's just like the Nullarbor, 100k in from each end it goes up by a huge factor and stays that way across to the other side.
You also come across big towns that all have the same price but back sometimes only 5 or 10k the fuel is much cheaper even though it is trucked from the large town to the little one.
In metro areas it goes up and down on a regular square wave type line same price drop on same day every week.
Yes there is no collusion ;-)))
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Follow Up By: sweetnam - Tuesday, May 10, 2011 at 08:00

Tuesday, May 10, 2011 at 08:00
We drove from Cairns to Syd last year after doing the cape.

We also found that the servo's on the highway were upto 10c more expensive than if you actually went into town.

They were just hoping travellers would stop, fill up and continue travelling.

We made a point at each stop, actually turning off the highway and heading into town and fill up where the locals did.

B
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Follow Up By: Ozhumvee - Tuesday, May 10, 2011 at 08:42

Tuesday, May 10, 2011 at 08:42
That applies to most places where the highway bypasses the towns, Coober Pedy is a prime example, up to 10 cpl difference!
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Reply By: Member - Tezza Qld - Tuesday, May 10, 2011 at 08:00

Tuesday, May 10, 2011 at 08:00
Nothing new about that.

I drove fuel tankers for Shell in Brisbane from 1985 to 1992 and this was always the case, especially if the servo was selling on a commission basis only. Was the same in Warwick and Kingaroy also. We could never figure the price structure out as in those days we had to pick-up a cheque on delivery and thier buying price was sometimes the same as Brisbane outlets. Apparently there was some sort of rebate system at that time.

All very confusing with the only thing for certain is we are being ripped off as usual and the governments are to guttless to do anything.

Cheers Teza
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Reply By: Member Al (Sunshine Coast) - Tuesday, May 10, 2011 at 09:56

Tuesday, May 10, 2011 at 09:56
Not saying there is no collusion.
Not saying there is no rip-off.

But yes, you may be missing the plot.

In marketing any product it is the norm to sell at "what the market will stand". In other words to maximise your profit.
The consideration of minimum selling price is to not sell so low as to make a loss.
The consideration of maximum selling price is to not price it so high as to get insufficient sales.

So the selling price is established somewhere between those two, based on whatever the seller considers appropriate. The market (response of buyers) then tends to level out but not necessarily equalise the selling price. Hence there will be price differences which do not appear related to manifest factors such as location but may be related to opportunism or exploitation. It is also possible that competing sellers could arrive at similar or identical selling prices.

And it has nothing to do with the ACCC unless there has been complicity between sellers.

I do however firmly believe that the public are being manipulated by the fuel producers/wholesalers/retailers by planned variations in the selling price.


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Allan

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Follow Up By: Member - Boobook - Tuesday, May 10, 2011 at 11:18

Tuesday, May 10, 2011 at 11:18
Thanks for that Graeme Samuel.

Nice theory if there are lots of players in a free market and you have an active consumer watchdog. Irrevelent in Australia for Fuel.



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Follow Up By: Member Al (Sunshine Coast) - Tuesday, May 10, 2011 at 12:39

Tuesday, May 10, 2011 at 12:39
Huhh Boobook??

In Australia we DO have lots of players, we DO have a "free" market (where there is no economic intervention and regulation by the state) and we DO have a consumer watchdog. The ACCC does monitor the retail prices of unleaded petrol, diesel and automotive LPG and uses this information to examine the competitiveness of retail fuel prices in the interests of consumers.

And its not my theory. You will find that explanation of establishing selling prices in virtually every marketing textbook. You HAVE formally studied marketing, haven't you Boobook?

So just how is it irrelevant?

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Follow Up By: Member - Boobook - Tuesday, May 10, 2011 at 12:58

Tuesday, May 10, 2011 at 12:58
Yes, I have formally studied marketing and been the Marketing Manager of a $500million coompany Al.
BTW free markets need true and disparate competition, we don't have that in Australia for Fuel, its not just government intervention.

You do seem to have enough knowledge to almost pass Marketing 101. Congratulations Al. It's just that you state the bleeding obvious about the free market. A bit of a no brainer. There is more to it than just that though.







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Follow Up By: Member - Leigh (Vic) - Tuesday, May 10, 2011 at 13:52

Tuesday, May 10, 2011 at 13:52
Most of the action is done either over lunch, weekend tennis or in establishment clubs. Way too smart to be caught manipulating the markets!
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Follow Up By: Member Al (Sunshine Coast) - Tuesday, May 10, 2011 at 14:59

Tuesday, May 10, 2011 at 14:59
Then Boobook, how about some intelligent comment on the original post rather than take snide potshots at me.

And what you perceive as "bleeding obvious" may not be to all readers. Of course there is "more to it"....... lets hear some.

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Follow Up By: Member - Boobook - Tuesday, May 10, 2011 at 15:42

Tuesday, May 10, 2011 at 15:42
Surely you don't believe that the petrolium market is a free market without colusion Al.


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Follow Up By: Member Al (Sunshine Coast) - Tuesday, May 10, 2011 at 17:24

Tuesday, May 10, 2011 at 17:24
Is that the extent of your intelligent comment BB?

Read the definition of "Free market" in my post above. Not my words ... it was copied from an authoritative source. A free market has nothing to do with your "true and disparate competition". You are confusing it with a Competitive Market.

I said in my first post..."Not saying there is no collusion"....

Now come on.......... stop with the irrelevant petty pot-shots at me and give us all the benefit of your Marketing Manager experience by commenting on the OP.

Now I am finished with this pettifogging exchange.

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Follow Up By: Member - Bruce C (NSW) - Tuesday, May 10, 2011 at 18:16

Tuesday, May 10, 2011 at 18:16
Down here in NSW, the state of extortion, we were told coming up to the Easter Weekend that fuel prices were going up because of all the trouble in the middle east and the "spot price" was climbing sharply.

Prices went up before the Easter weekend and have pretty much stayed that way around my area.

Now, last night it was anounced that fuel prices for a barrel of crude was falling because of oversupply.!!!

If that isn't someone playing around with fuel prices well I can't figure it out.

We are being had. In America they pay about 50 cents per litre ($2 per American gallon) and don't they scream if it goes up by a cent a litre. Well so I have been told.

Cheers, Bruce.
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Follow Up By: Member Al (Sunshine Coast) - Tuesday, May 10, 2011 at 18:36

Tuesday, May 10, 2011 at 18:36
Yes Bruce, In the Good Ole USofA, the right to cheap gasoline is as entrenched in their Bill of Rights as is the Right to Bear Arms.

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Follow Up By: Patrol22 - Tuesday, May 10, 2011 at 19:12

Tuesday, May 10, 2011 at 19:12
Agree with your view on the free market Al but not on the price of petrol in the US of A. Today in California petrol is $3.99 per gallon (or about a $1 per ltr) - over or the east coast in New York it is $4.50 to $4.90 per gallon (about $1.20 per ltr). Diesel in NY over the past 24 hrs or so has averaged around $4.80 per US gallon. So the prices in the US are just as volatile as in Aus.
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Follow Up By: Member Al (Sunshine Coast) - Tuesday, May 10, 2011 at 22:06

Tuesday, May 10, 2011 at 22:06
Bruce said "50 cents per litre" in USA?? ......... just can't believe anyone no more! LOL

But thanks for the "free market" gong.

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Follow Up By: Member - Bruce C (NSW) - Wednesday, May 11, 2011 at 17:13

Wednesday, May 11, 2011 at 17:13
Sorry Al and Patrol22, information was a bit old obviously.

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Reply By: Member - Joe n Mel n kids (FNQ - Tuesday, May 10, 2011 at 10:16

Tuesday, May 10, 2011 at 10:16
a few things to think about before you run off and start your own fuel empire ......
Our last load, back at the start of April was 40,000L at $65,692.00 for diesel and 8,000L at $12,628 for petrol at a total of $78,320 inc GST....... no i wont tell you how much we paid per L as i am not allowed to :-)
So IF you have a spare $78,000 DOLLARS in your bank you are welcome to have a crack at it but you wont get your money back real soon nor will you make a great deal of money doing it ...... i think we have about $600,000 worth of tanks, pumps, electricials ect to be able to retail it, then there is the "point of sale", by law we HAVE to have certain approved and tagged dispensing/measuring gear in place and that for the fuel alone is around $10,000 just to be legally able to sell it....
Yes i do look at some that seem to be charging a lot and i do see comments about avoiding the big retailers like BP, Shell ect but we buy from them so sadly even that probally wont work, so what do we do ???
I really dont know, we all need to identify an indepentent WHOLESALER who is not tied to the big companys and then find who they sell to as retailers and throw all our support at them, that is about the only way i can see any effect being made on the big people .....
Do remember i also have a car and it uses fuel and i get out a bit so i hurts us all, we are lucky we have a very high dollar at the moment as we probally would be sailing past the $2-00 mark at the citys by now..
I am un-loading about $120,000 dollars worth RIGHT NOW and it has to be paid for now ...... happy ??? NUP
Cheers all
Joe
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Follow Up By: Member Al (Sunshine Coast) - Tuesday, May 10, 2011 at 11:05

Tuesday, May 10, 2011 at 11:05
Thanks Joe for that. Very interesting!

And there folks you have a real-life example of "Cost of Goods" plus "Cost of Sales".(not all though I realise). Add to that a reasonable profit margin and you have the MINIMUM selling price to stay in business.

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Reply By: The Landy - Tuesday, May 10, 2011 at 11:06

Tuesday, May 10, 2011 at 11:06
And while we are beating up service stations, who margins are so fine that you'd be flat out seeing them without a magnifying glass, attention would be much better directed at retailers Coles and Woolworth's.

Sort out (food) pricing disparties between their stores within the same city and you'll save more than you ever will beating up servo's. Especill given most of us eat every day....

My two bob's worth...'The Landy'

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Follow Up By: Shaver - Tuesday, May 10, 2011 at 14:42

Tuesday, May 10, 2011 at 14:42
No one is beating up Servo's ! The question is why there is a consistant lower price in a area that has fewer outlets than a major city. The information that is broadcasted constantly by motoring bodies is through competition from the local Servo's in the area. Well I can tell you that there is not many Servo's in Toowoomba & each would be struggling even at Retail prices, so who is behind them to allow the price to be so low on a regular (annual) basis. If anything you would expect the local Servo's to have a higher price as they used to have before, but obviously someone is propping them up for some unknown reason. Thus the QUESTION if it can be done there why not elsewhere !
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Follow Up By: The Landy - Tuesday, May 10, 2011 at 15:38

Tuesday, May 10, 2011 at 15:38
Shaver
That is a fair point you make in response to my post.

I think the reality is that prices will vary between geographical locations, especially within the boundaries of major Australian cities. And this occurs as marketing discounts are applied and taken off. So at any given time prices in parts of Brisbane may be higher or lower than Toowoomba.

As to specifically why Toowoomba is lower, I guess you would need to look at the ‘stats’ to determine if that has been the case over a period of time to get some perspective on it. Perhaps there are high turnover outlets servicing trucks etc. But I don’t have the answer to your specific question.

But on the question of the ACCC being a toothless tiger. Maybe they are, but in respect of fuel prices in Australia there has been any number of enquiries, and they have determined there is no collusion, and rest assured if there was any hint there was between the major operators they would be all over it, and the politicians would make sure of it as they would look like the ‘champions’ of the little people. A sure vote winner!

And there is very little money made out of refining fuel in Australia, or retailing it, as Joe from Doomadgee points out in a previous post. Mobil closed Port Stanvac a few years back, Shell have just closed Clyde in Sydney, why, because there is no money in it.

Cheers, The Landy
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Follow Up By: BarryR1 - Tuesday, May 10, 2011 at 17:30

Tuesday, May 10, 2011 at 17:30
I believe the oil companies. I also believe that nicotine is not addictive ha ha.
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Follow Up By: The Landy - Tuesday, May 10, 2011 at 17:39

Tuesday, May 10, 2011 at 17:39
Yeah, yeah, but you're still checking for 'reds under the bed' every night for those dastardly commies... ha ha ha

Cheers, The Landy
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Follow Up By: Member Al (Sunshine Coast) - Tuesday, May 10, 2011 at 17:40

Tuesday, May 10, 2011 at 17:40
I agree that there is little money made from refining fuel in Australia or from retailing it. But it has been thus for many years. My good mechanic mate opened a servo in the 1950's and said at the time that the only benefit in selling petrol was to attract custom to his repair service.

Despite the simplified expression I made above about determining selling price it is obvious that some major resellers manipulate the market in a number of ways undoubtedly in order to maximise their profits. Unfortunately there seems to be little that the consumer can do about it.



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Follow Up By: The Landy - Wednesday, May 11, 2011 at 11:33

Wednesday, May 11, 2011 at 11:33
Al
And adding...has anyone wondered why the local service station looks more like the chip and lolly aisle in Woolworth’s than a fuel outlet?

Walk into most to hand over your 100 bucks (or whatever) for the fuel just purchased and you are confronted with a vast array of fridges selling every drink under the sun, and a chocolate bar to go with it, and all for $5 something. Well the reality is they are going to make more money out of that then the fuel you just purchased...

Cheers, The Landy
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Follow Up By: Member Al (Sunshine Coast) - Wednesday, May 11, 2011 at 15:18

Wednesday, May 11, 2011 at 15:18
Yes Landy, was talking socially to the manager of a big servo on the Bruce Highway about "drive-offs" and I suggested they used an arrangement like a toll-booth. "No good, we need them to come inside and make extra purchases" he said. "We make much more there than we lose in drive-offs".

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Reply By: Member - Kevin S (QLD) - Tuesday, May 10, 2011 at 15:55

Tuesday, May 10, 2011 at 15:55
Surely none of you are advocating regulation of fuel prices. Then everyone pays the same price and everyone pays more.
Kevin
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Reply By: Rockape - Tuesday, May 10, 2011 at 16:09

Tuesday, May 10, 2011 at 16:09
Shaver,
maybe we could do what France did and tell them this is the max we are going to pay for fuel and that was that.

Guess if Australia tried it they would tell us to "go row your boat little country'

Agree with Landy, Coles and Woolies are right in there boots and all.

Have a good one

RA.
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Reply By: Member - DAZA (QLD) - Tuesday, May 10, 2011 at 16:38

Tuesday, May 10, 2011 at 16:38
And the Government still rakes in the Excise Tax and the GST, the dearer it is the more money they get.

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Follow Up By: Hairs - Tuesday, May 10, 2011 at 18:04

Tuesday, May 10, 2011 at 18:04
Spot on Daza.
Now, why would State and Fed governments want cheaper fuel?
They couldn't give a rats.

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Follow Up By: Patrol22 - Tuesday, May 10, 2011 at 19:18

Tuesday, May 10, 2011 at 19:18
Fair comment Daza but we all know that Govts need money to operate......and they get their money from taxes.....and that comes from you and me...if it wasn't from petrol it would be from something else that would probably result in the burden be shared by fewer people.....it a merry-go-round mate and you can't get off!
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Reply By: Bigfish - Tuesday, May 10, 2011 at 20:29

Tuesday, May 10, 2011 at 20:29
Little bit off track but still about fuel price.Ramingining is a small aboriginal community in East Arnhem Land. The recent wet season destroyed the road that leads to the barge landing where fuel is brought in on a barge and trucked into town (20klm). The only way to get the fuel into town for the power plant was by helicopter. The price when totalled for the fuel to the power house was $15.00 a liter!! 200 liter drums (3 at a time) were airlifted to the power house. Several hundred were done like this until a barge load of rock was brought in. Dont know what the locals paid for it for their cars!

The joys of remote living.
cheers
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Follow Up By: Member - Joe n Mel n kids (FNQ - Tuesday, May 10, 2011 at 22:01

Tuesday, May 10, 2011 at 22:01
interesting ... we lived on Bickerton Island 4 years ago and we retailed fuel at $2-20 a L, about .30C a L margin only, heavens knows what it is now eh ....
One good thing about the wet and when it gets big, no one can go anyware so fuel consumption goes way down and we dont use 1/4 of what we normally use in the dry .......
I would far rather pay $3-00 buks a L and see the places i see than live in any city and spend my time chasing the cheapest price when i could be out here in the thick of it...
If only everyone that puts in a reply to this thread lived out in these places for a while they would not really give a tug about fuel prices, yeh they hurt but really, what do you expect, things are really bad in the world as a whole and we as Aussies have been a tad lucky in that we are still able to at least afford to travel and afford to buy fuel, time to pull our heads in, toughen up girls and get over it as we are still all living in a very lucky country, even if some warped woman is running it it aint so bad ...... after all we can still afford the internet connection to type this winge and the computer to type it on....
Ok back under my rock out in the bush...
Cheers all
Joe
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Follow Up By: Member Al (Sunshine Coast) - Tuesday, May 10, 2011 at 22:10

Tuesday, May 10, 2011 at 22:10
Amen Joe.

Cheers
Allan

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Follow Up By: The Landy - Wednesday, May 11, 2011 at 10:32

Wednesday, May 11, 2011 at 10:32
Well put Joe!

Cheer's, The Landy
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Follow Up By: Member - Kevin S (QLD) - Wednesday, May 11, 2011 at 15:29

Wednesday, May 11, 2011 at 15:29
Thanks for your views Joe. You sound like the kind of Aussie that I go bush to meet.
Kevin
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Reply By: Mogul - Tuesday, May 10, 2011 at 21:22

Tuesday, May 10, 2011 at 21:22
Shell's wholesale pricing is at the link below. They are certainly making some good money on diesel at the moment.

TGP price
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