SUBJECTS: FuelWatch
JOHN STANLEY:
As you've heard this afternoon, the Federal Government's announced this Fuel Watch program; which will essentially mean that from the middle of December you'll be able to go online and you'll be able to see what petrol prices will be the next day; and oil companies and petrol retailers will be required to post the price a day in advance and then keep the price at that level for that 24-hour period. So I'm assuming right now I could go online and I could see what the petrol prices are at all the petrol stations around Sydney tomorrow and then I could make my judgement as to where I'm going to go and shop.
I'm not sure it'll go down all that well with the oil companies. The NRMA has welcomed it. It is suggesting there could be an average drop of 5 cents a litre in the price of fuel. Chris Bowen is the Assistant Treasurer, he's driven this move, he joins me now.
Mr Bowen, good afternoon to you.
CHRIS BOWEN:
Good afternoon John.
STANLEY:
Are you prepared to be as bold as the NRMA and predict a drop of as much as 5 cents a litre, average?
BOWEN:
Well what this is about is giving consumers a level playing field, so as you say, from now on, once this scheme is implemented, you can log-in from around 3 o'clock in the afternoon, and you can see what the price of fuel will be in service stations tomorrow; you can download your route to work – you can get all that information.
Now, what this does is it means that service stations need to provide their best price, the day before. They need to work out what's the cheapest they can go or they'll lose business. So, there is some evidence that in Western Australia it has put downward pressure on prices but the really big benefit is that it really gives consumers a much more balanced playing field. It means that motorists no longer have to drive past a service station in the morning and think ‘oh, that looks cheap I'll buy there this afternoon when we drive back' and then find it's 10 or 15cents higher when they drive back. Those days will soon be gone.
So it's really about – the real reason to do this is to give motorists a much more level playing field. There is evidence that there's downward pressure on prices from doing this but the really good initiative in this is the information for consumers.
STANLEY:
So you're not prepared to commit to any drop in petrol price?
BOWEN:
Well, the ACCC did a very detailed analysis of how this works in Western Australia and they found, on average, there's substantial evidence to show that it has reduced petrol prices by about 2 cents a litre. Now bearing that in mind and the difference in Perth for example between the most expensive and the cheapest service station is 15cents a litre. So if you can get the information to find out where the cheapest petrol is and you know, you are 100 percent certain, by the time you get there that it won't change then you can make substantial savings.
STANLEY:
Most of the service stations in Sydney are owned, I assume, by oil companies – by 2 or 3 large companies. Is that right?
BOWEN:
There's mixture but yeah that's essentially (inaudible)
STANLEY (interrupting):
Yeah (inaudible). You must've spoken to them and put (inaudible) to them?
BOWEN:
Look as I said today with the Prime Minister, this will be a very controversial move. There will be people who oppose this bitterly, we know that. If we wanted to go down the easier road, we wouldn't have done this. We know this will be very controversial and that there will be a lot of people, over the next couple of days, saying they don't support this. But really, what we have to do is weigh up the benefit for motorists and consumers and that's something we are prepared to do.
STANLEY:
Have they indicated to you that they're opposed to it, the large companies?
BOWEN:
Yes, the oil companies are opposed to it – that's correct.
STANLEY:
And what if they say, ‘alright well as a result of you doing this what we're going to do is we won't have cheap fuel on Tuesdays now, we'll just keep it high all the time'?
BOWEN:
Well the evidence is, again from Western Australia, is that there's still a cycle. It is not as extreme as it is in the eastern states. So yes, there is still cheaper days and more expensive days but there's more certainty for people and the prices don't go up and down as much.
You would know John, wherever I go I get people saying to me: ‘we understand that petrol is not as cheap as it used to be, but why are there these big differences? Why are we the only country in the world with this price cycle?' And they're right – nobody can explain it. Now this doesn't mean that the price cycle is over but it really means that consumers can really take advantage of this price cycle a lot better.
STANLEY:
I just had a bizarre conversation last week with one of the spokespeople for the oil companies trying to explain the price cycle...
BOWEN:
Yeah I heard a grab of that. I didn't actually hear the interview, I heard (inaudible) later. I thought that was a...
STANLEY:
Well, I'm still trying to work it all out. We may have to try to revisit it in the next couple of days but do you really think that they're prepared to give up a substantial share of their profits in the interests of posting their prices up in advance?
BOWEN:
Well, it's not a matter of options – this will be the law...
STANLEY:
No, what I'm saying is: they'll have to post the price...
BOWEN:
Yes.
STANLEY:
...but there's nothing in this that says they've got to drop it.
BOWEN:
No, but if you're a service station and you don't put in your best price, you know that every consumer in the country can go somewhere else because all you'll have to do is log on to a website, you can subscribe to emails or text messages. You can find out that there's a cheaper service station just down the road and you'll go there. So if you're a service station at the moment, you can think, ‘well we'll start off the morning a bit high and we'll see what our competitors do and we'll keep an eye on it and we'll come down when we have to'. You can't do that anymore...
STANLEY:
So you'd rely on the independents to drive this, I assume.
BOWEN:
Well, it is really about driving everybody to put their best price forward ‘straight up' and then giving consumers all the information they need to make their decision. And there are really a lot of very interesting and innovative things you can do. As i say, you can go on to this website and say, ‘I live in Fairfield' for example ‘and I work in Parramatta' and you can put in your route and every service station along the way will come up and you can choose the cheapest petrol along the way.
The other thing is, from 3 o'clock, you're thinking ‘well I'll drive home tonight, I might get petrol'. You can look up and you can think, ‘well, hang on a second, petrol's going to be 10 cents a litre dearer tomorrow,' for example, ‘so I'm going to fill up as much as I can tonight; or alternatively, ‘they're coming down tomorrow, so I'll hold off for a bit'.
STANLEY:
And we'll be able to do our own search here and let our listener's know as well, that might be in the car.
BOWEN:
It's really important that the media help us on this, to spread this information.
STANLEY:
Finally, quickly, why can't it start earlier?
BOWEN:
Well, we really want to make sure we get this right John. It is really a big task. The worst thing we could do is try and rush it; and then find that the system isn't robust enough, that our website crashes – things like that. So we need to do a lot of testing, there's legislation that has to go through the Parliament – we actually have to change the law; we are going to be talking to States about their laws. So there's a lot of water to go under the bridge – we're really keen to get it in by Christmas but I also, by the same token, don't want to rush this and get it wrong.
STANLEY:
And it will apply to all fuel sold? It won't just be petrol? Diesel?
BOWEN:
It's all (inaudible). It's diesel, LPG, all the different types of petrol. And I should say, so your listeners have all the information, metropolitan and big rural towns will automatically be in; for those smaller areas we'll talk to the local council about whether they want to be included or not.
STANLEY:
Okay. Chris Bowen, I thank you.
BOWEN:
Pleasure.