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Petrol prices tumble but record gross margins mean you pay more

  • September 02 2020
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Invest

Petrol prices tumble but record gross margins mean you pay more

By Cameron Micallef
September 02 2020

The average petrol price in the June quarter fell to its lowest level in 21 years in real inflation-adjusted terms as a result of the recent lockdowns and geopolitical tensions, but gross retail margins remained at record highs, costing consumers, official records have shown.

Petrol prices tumble

Petrol prices tumble but record gross margins mean you pay more

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  • September 02 2020
  • Share

The average petrol price in the June quarter fell to its lowest level in 21 years in real inflation-adjusted terms as a result of the recent lockdowns and geopolitical tensions, but gross retail margins remained at record highs, costing consumers, official records have shown.

Petrol prices tumble

Results collated by the ACCC across Sydney, Melbourne, Brisbane, Adelaide and Perth found that, on average, motorists paid 109¢ per litre (cpl) of fuel for the June quarter.

Despite this being a 28.8 cpl reduction in fuel costs, the ACCC noted that the gross margin on fuel rose to its highest level since the commission started calculating fuel prices in 2002.

Across the five largest cities, annual averaged differences between the retailer and terminal prices in 2019-20 were 14.7 cpl (2.7 cpl higher than last year’s average). 

Consumers in Brisbane had the highest annual average difference at 16.8 cpl, and Perth had the lowest at 12.3 cpl.

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The level of prices, costs and profits vary significantly between retail operations, and not all retail petrol sites will be achieving these gross margins.

“Many Australian motorists benefited from lower petrol prices over the first half of this year, but we have some concerns about the higher gross margins that petrol retailers seem to be holding on to,” ACCC chair Rod Sims said.

The ACCC’s report showed that the COVID-19 pandemic’s hit to economic activity has decreased demand for petrol, and sales volumes were 27 per cent lower in the June quarter 2020 compared with the same period last year.

“There are some fixed costs involved in petrol retailing, and it’s likely that businesses have increased gross retail margins, to some degree, to offset lower sales volumes,” Mr Sims said.

“While less petrol being sold during COVID-19 restrictions may be a contributing factor to the record-high gross retail margins, we’re not convinced that this fully explains the levels we’re seeing.”

Petrol prices tumble but record gross margins mean you pay more
Petrol prices tumble
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About the author

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Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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