The Australasian Association of Convenience Stores (AACS) has thrown its support behind petrol retailers who the industry group believes have been “unreasonably and unfairly” accused of price gouging.
The comments, made by AACS CEO Jeff Rogut, follow the release of the Australian Competition and Consumer Commission’s (ACCC) latest petrol price report earlier this month.
The report found average petrol prices in 2015–16 were at their lowest levels since 2002, however, gross retail margins had increased to their highest levels.
Mr Rogut said claims of high margin growth “not only paint retailers in an unfairly bad light, they ignore the facts that margins on petrol remain relatively unchanged in the past decade”.
“Fuel price fluctuations ebb and flow in direct correlation to external price pressures and the ever increasing cost of doing business. Our industry is certainly not unique in this regard, so it makes no sense and is absolutely unfair for a body with the influence of the ACCC to demonise and embarrass responsible retailers in such a public fashion,” Mr Rogut said.
AACS: Data “unfounded and untrue”
According to ACCC’s petrol report the average price for petrol in the five largest cities (Sydney, Melbourne, Brisbane, Adelaide and Perth) in 2015–16 was 121.7 cents per litre (cpl). This was the lowest annual average since 2001–02 in real terms (adjusted for inflation).
Gross retail margins, the difference between retail prices and published wholesale prices, in the five largest cities increased by 1.2 cpl on the previous quarter, and averaged 11.2 cpl in 2015–16, the highest level since the ACCC began monitoring them in 2002.
Following the release of the report ACCC chairman, Rod Sims, said the competition watchdog was concerned motorists were not “reaping the benefits” of lower international crude oil and refined petrol prices.
“Bowser prices for motorists last year were the lowest they’ve been on average for 14 years, but this report suggests that in order for there to be more competitive pressure on retailers, consumers need to shop around and reward those offering the best-priced fuel,” Mr Sims said.
Mr Rogut has since labelled suggestions that petrol margins have spiked in recent years as “unfounded” and “frankly untrue”.
“The figures quoted by the ACCC fail to take into account additional costs to meet regulation and compliance requirements and do not reflect actual cash flow,” Mr Rogut said.
“Petrol stations must safely handle hazardous materials, they must account for vapor control, they must justifiably meet strict safety and compliance standards, and they must do this in the context of a highly competitive environment. Since 1970, the number of Australian petrol stations has fallen from 20,000 to just over 6000. The cost of investment in developing new sites is significant.”
Mr Rogut said stores have upgraded equipment and employed baristas in some cases to improve the customer offer, yet these operating costs have not been accounted for in the recent margin figures quoted by the ACCC.
“The pointed remarks made in the media don’t tell the real story but instead hang retailers out to dry in a reputational sense. It is time for governments, the ACCC, other authorities and the media to stop treating retailers like criminals,” Mr Rogut said.
Service station operators under continued pressure
One AACS member, a service station operator with licensees in multiple states, reports that its gap between net retail margin and operating costs has barely moved over the last 10 years.
“In a sense, the ACCC has diminished competition in the marketplace because of their approval and long term support of predatory and discriminatory supermarket shopper dockets; this unfair competitive environment created by the ACCC has led to the demise of many independents and competition,” Mr Rogut said.
He added operating costs for petrol stations continue to grow as businesses evolve to meet the growing needs and constantly changing demands of their customers.
“The margins that small businesses derive from the sale of petrol are very low, but it is an important service to offer to consumers to encourage the purchase of additional items. Surely these small business people should be entitled to make a profit to support their families, their staff and themselves.
“It is grossly unfair for government bodies to misleadingly accuse retailers of price gouging – when the facts clearly show the opposite – then refuse to implement any real deterrents nor even recognise that another $55 million annual cost burden – stealing petrol – is a crime that requires a coordinated effort to tackle.
“No matter which perspective, retailers bear the brunt of financial damage and are still portrayed as the bad guys anyway. It has to stop. The AACS calls on the ACCC to cease labelling small businesses as greedy when it is demonstrably not the case,” he said.
PM: Petrol prices a matter for the ACCC
Speaking on 2GB last week, Prime Minster, Malcolm Turnbull, said ongoing petrol price hikes were “definitely a matter for the ACCC”.
Mr Turnbull said it was “hard to justify” petrol price hikes such as $1.20 to $1.45 in a matter of days as an example, however, said the petrol industry “is a competitive business”.
“Over the years we felt that the solution was competition and transparency and it is very competitive.”
“There are plenty of ways consumers could access information about petrol pricing such as smart phone apps. But of course the problem is that there a very few of us that have time to drive around and look [for the cheapest petrol].”