Hi folks,
Why is it that petrol prices operate on a cycle and spike up suddenly, followed by a period of slowly dropping?
I've not been able to find any worthwhile information around this, aside from a bit of info from ACCC here. But it doesn't really answer the question of why this is deliberately done.
https://www.accc.gov.au/consumers/petrol-diesel-lpg/petrol-p…
Mainly curious. Thoughts?
Thanks.
In my area (Adelaide), only the petrol (91/95/98/E10) price swings wildly. We're now on a 3 to 4 week cycle peak to trough, so people are forced to buy fuel out of cycle. Around five years ago the cycle was weekly.
Diesel and LPG don't follow the cycle at all here, so between 2009 and 2015 I had an LPG vehicle and since then changed to diesel. No more trying to time the cycle, frustration at looking at the price spike 30c/L overnight, etc.
Check out the terminal gate price for your area here: http://www.aip.com.au/pricing/tgp/index.htm
That will give you a good idea of how much profit is being made, and how low the fuel price cycle will go.
The idea that gas stations make money of petrol is incorrect.
They have very small profit margins and have to deal with a reasonably large number of driveoffs (cuz… cobbas need a fair go).
Bulk profits made off food.
My local service station is selling petrol for 139.9c/L right now, yet the terminal gate price is 116.2c/L today. That retail price has stayed the same for a week. Are you sure service stations make very small profit margins on fuel?
Now naturally the operators prefer people to walk in and buy a 1L bottle of water for $3. Easy profit.
@cluster, very true.
But how do you (or the ACCC) know there are no kick-backs, rebates, benefits etc.?
Surely margins are slim, but on-costs are not huge when you only half pay your staff before they have to go home, or thin the fuel with tolulene, regular 'top-offs' of ethanol, etc.
The TGP is as cheap as it gets when they want to empty the tank the day the truck comes to replenish it, I find it generally pays to know when your favourite servos' deliveries come to time it just right!
Why does everyone think the world is conspiring to "get you".
"awww all da men in suits are schemeing to take 30c more from mi"
"mi fuel is being thinned with tolulene"
What part of it doesn't get you, where it counts? Or is it just you that doesn't get it?
Oil companies are just making money in a mature, regulated, 'free-market'. They are some of the oldest companies in our community, and have been at it for years.
'It' being;
- influencing regulatory bodies
- influencing legislators
- paying PR & marketing companies vast amounts to influence consumers, debate, etc.
- (allegedly) collusion & price fixing, though this is always hard to prove, and it is not in the interests of anyone in these companies (and it is in the interests of them to ensure that anyone in power's interests align similarly)
They would say they're obligated to do all this and more as Directors of public companies. Being incentivised to do it in order to line their own pockets however encourages them to turn a blind eye to their own ethics and morals, if they have any bu the time they have done what it takes to be tapped for a board position. In short, they are professional rule benders, if not far worse.
That is not conspiring to get you per se. But it may be worse. It is plain old circumvention 'dressed up as business', crime, or both. And if you think it is better oin Oz than under the oligarchs in the USSR, or the sheiks in the middle east, consider that it needs to be considered in relative terms, and that every decision affecting this industry is very political. And those terms are never disclosed and/or clear to unconnected, non-economists outside the industry, and it is no accident that people are well insulated/kept away from making any choices affecting the oil industry in pretty much all societies today.
ACCC have another PDF on Petrol Price Cycles:
https://www.accc.gov.au/system/files/Fuel%20facts%20-%20Petr…
Below is an extract:
What factors influence price cycles? … it is possible that price cycles in the largest Australian retail markets demonstrate strong competition between service stations that lower their prices to compete for market share until they approach a point when they may be at or below cost. As this is not sustainable, prices are then increased and the pattern is repeated.
Petrol price cycles in Australia … The price cycles may also be affected by differences in consumer demand for petrol during the week. At times of low demand, retailers have a stronger incentive to discount their prices; when demand is higher, retailers can increase prices with less risk of losing customers. Price support, historically offered by some petrol wholesalers to service stations to help them maintain competitive prices, can also influence the pattern of petrol price movements. When demand for petrol is low, price support can result in price reductions. When price support is withdrawn, the price of petrol climbs quickly to enable retailers to make their margin on petrol sales. Price support is less frequently offered today than in the past.
You guys should be happy that there is healthy competition in your capital city. Canberra does not have any price cycle. Its just a constant high price. Checkout how flat Canberra's fuel cycle has been from year to year and month to month.
http://www.aip.com.au/pricing/retail/monthly/canberra.htm
Until Costco opened a fuel station in Canberra 2015 it had been the city with consistently the most over priced fuel:
http://www.canberratimes.com.au/act-news/costco-and-fuel-wat…
Very true about Canberra. This article a few years ago sums it up, Woolworths increasing their fuel price as soon as Costco closes. http://www.canberratimes.com.au/act-news/woolworths-raises-p…
Petrol companies must believe that they are generating extra profits by having a pricing cycle.
Does LPG/Diesel/Premium petrol have such large variations?