Wednesday, October 15, 2014

Perpetual Petrol Price Perplexity

The Cairns Post has run again on the always contentious issue of petrol prices: Petrol rivalry needed to curb fuel hike in Cairns and Far North Queensland

The perplexity on petrol prices is even more perplexing because of the number of inquiries there have been and the amount of information that is freely available. You can find lots of information on petrol prices at the Australian Institute of Petroleum, which is sourced from Motor Mouth.

The wholesale price structure is actually quite transparent and is derived from a benchmark for refined products out of Singapore. Obviously more remote locations will pay more at the retail level. Beyond that some concerns on regional retail prices related to regional competition are more valid. These are the 40 week average graphs from AIP for Cairns and Townsville:

 Townsville
 Cairns
 
Cairns has historically had higher prices but they also tend to be less volatile than Townsville and lag any moves which would seem to me to be indicative of an absence of competition. I don't have access to longer term data but think when I looked at this previously a few years ago Cairns also lagged on any upward move but could be wrong on that so would have to check.

The larger scale and most competitive markets in SEQ apart from being cheaper exhibit entirely different price characteristics to the regions. This is the 40 week average for Brisbane but is also replicated by Gold Coast and Sunshine Coast:

Brisbane
 
Increased competition will also increase volatility which then becomes another source of perplexity for the populace, particularly on talkback radio and facebook forums!

Meanwhile among the regions the most curious of all in recent months has been the retail petrol price in Ayr. Not only is it below Townsville but has the lowest premium to SEQ in the state by a not insignificant amount:

Ayr

What the hell is happening in Ayr? I did send a query recently to Motor Mouth and also to the local Ayr Advocate with no response. Perhaps I should have sent the query to the Burdekin Herald?

Update: There is feedback that there have been two new petrol stations open in Ayr. Maybe something to keep a watch on.

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