Federal Cabinet today approved the establishment of a National FuelWatch Scheme to promote competition and transparency in the petrol market.
The establishment of Australia's first National FuelWatch Scheme will help ensure motorists are not paying a cent more than they have to at the bowser.
The National FuelWatch Scheme will help motorists buy the cheapest petrol, at the cheapest petrol stations, at the cheapest times.
Under the National FuelWatch Scheme, petrol stations in metropolitan and major regional centres will be required to:
- Notify the ACCC of their next day's prices by 2pm the day before;
- Maintain this advised price for a 24 hour period; and
- Apply the scheme to unleaded petrol, premium unleaded petrol, LPG, diesel, 98 RON and biodiesel blends.
The petrol price information collected from these petrol stations will be made available to consumers through:
- An email and SMS alert service informing subscribed consumers details of the cheapest fuel in their area;
- A national toll free number where motorists can locate the cheapest petrol in the area they are looking to purchase fuel: and
- A National FuelWatch website with station by station, day by day and suburb by suburb petrol price information.
By giving motorists highly detailed and up to date information about local petrol prices, FuelWatch will help motorists avoid being ripped off.
No longer will a motorist drive past a petrol station in the morning only to return in the afternoon to find a 10 cent per litre jump in the price of petrol.
Importantly, FuelWatch will also see an end to Mums and Dads driving around on a Tuesday or Wednesday searching for the cheapest petrol.
Rather than guessing the best time and the best place to buy petrol consumers will know where and when to buy the cheapest petrol in town.
The restrictions included in the FuelWatch Scheme mean there is less flexibility for temporary upward and downward movements in prices. However according to the ACCC the effect of the scheme is that it forces retailers to post their most competitive price all day, everyday.
Petrol prices will always be linked to fluctuations in international oil markets. If the global price of crude oil goes up Australian retail prices will be affected.
The National FuelWatch Scheme is not a silver bullet that breaks this nexus; no government policy can guarantee that petrol prices will always go down.
But FuelWatch will ensure that drivers don't pay one cent more than they have to when filling up at the bowser.
FuelWatch was introduced with bipartisan support in Western Australia in 2001 and has been a welcome tool for WA motorists looking to save money.
Econometric analysis undertaken by the ACCC last year concluded that under the WA FuelWatch scheme the "relevant weekly average price margin was around 1.9 cpl [cents per litre] less on average".
The National FuelWatch Scheme is a key part of the Rudd Government's response to the ACCC report into the price of unleaded petrol. The Scheme will cost $20.9 million over four years and commence on 15 December 2008.
The extension of this scheme outside of metropolitan areas and major regional centres will be subject to negotiation between the ACCC and local Government authorities in rural areas. Rural local authorities will be able to opt in to the National FuelWatch Scheme – as they can under the WA FuelWatch model.
The Government will review the effectiveness of the national FuelWatch Scheme twelve months after it operations commences.
The ACCC will now begin working with petrol retailers to ensure a smooth transition to FuelWatch, and construct the supporting IT and communications infrastructure.
The National Fuel Watch Scheme will build on the Government's previous moves to give the ACCC formal monitoring powers and to appoint the nation's first Petrol Commissioner.
PENRITH
15 March 2008
Government Response to the
Australian Competition and Consumer Commission (ACCC)
Price Inquiry
Petrol prices and Australian consumers: report of the ACCC inquiry into the price of unleaded petrol
The ACCC released its report, 'Petrol Prices and Australian Consumers: Report of the ACCC inquiry into the price of unleaded petrol' (the ACCC report), on 18 December 2007. The ACCC report concluded that there is 'no obvious evidence of price fixing or collusion between the major participants in the industry' and that the 'fundamental pricing of petrol is dictated by international factors'.
The ACCC made recommendations in its report relating to reducing impediments to competition in the wholesale petrol market, as well as other minor recommendations relating to terminal gate pricing and an amendment to section 45 of the Trade Practices Act 1974 (TPA).
The ACCC report concluded that there was an imbalance in pricing transparency between buyers and sellers of petrol in Australia and identified three options for addressing the retail petrol price information imbalance. The ACCC also raised an issue about the role of petrol shopper docket arrangements in the retail sector.
Government response to recommendations and issues raised by the ACCC
Recommendation 1
The Government supports the ACCC's recommendation for a more detailed examination and ongoing monitoring of 'buy-sell' agreements to assess fully whether they are exclusionary in nature or have the purpose or effect of substantially lessening competition. The ACCC will form a view on the competition effects of the buy‑sell arrangements by the middle of 2008.
Recommendation 2
The Government notes the ACCC's recommendation and considers that Australia's fuel standards are already appropriately aligned to the international standards, when taking into account environmental and other objectives and moves in recent years by Asian countries to adopt more stringent standards. Therefore, Australia's fuel standards require no adjustment.
Recommendation 3
The Government supports the ACCC's recommendation that a comprehensive audit of terminals suitable for importing refined petrol in Australia be conducted. The Department of Resources, Energy and Tourism will manage the audit, in consultation with the ACCC and the Department of the Treasury, and report to the Government by the end of 2008.
Recommendation 4
The Government notes the ACCC's recommendation and will determine the need for ongoing monitoring of the use, leasing and sharing of terminals pending the outcome of the terminal audit.
Recommendation 5
The Government supports the ACCC's recommendation that the appropriateness of the arrangements for terminal gate price publication be reviewed as part of the scheduled review of the Oilcode by the Department of Resources, Energy and Tourism and the ACCC. A report outlining the outcomes of the Review will be provided to the Government by September 2008.
Recommendation 6
The Government notes the ACCC's recommendation that section 45 of the TPA should be amended to clarify the meaning of the term 'understanding'. The Government will examine the need to amend section 45 in light of the operation of significant amendments to the TPA currently underway.
Issue: Options to improve retail price transparency
The Government is committed to addressing the retail price transparency imbalance and eliminating consumers' angst caused by intra‑day price volatility. Of the three options outlined in the ACCC report, the Government considers that only FuelWatch will meet the Government's commitment to address the information imbalance and eliminate intra-day price volatility. The Government will therefore introduce a national FuelWatch scheme by 15 December 2008.
Issue: The role of shopper dockets in the retail sector
The Government notes that the ACCC will continue to consider developments in petrol shopper docket arrangements, including any changes in the extent of the impact of shopper docket arrangements on competition in the petrol market.