The Courier Mail (Australia): State may set petrol prices

By Steven Wardill
September 24, 2007 12:00am

PETROL retailers could be told what to charge under the latest official plan to prevent motorists being ripped off.

A high-level inquiry investigating why the State Government’s 8.3¢-per-litre petrol subsidy is failing to be fully passed on to motorists is considering the unprecedented step of recommending “benchmark” pricing.

Such a system would see prices independently determined, with petrol companies having to adhere to the set prices to recoup the entire subsidy.

The controversial move comes amid mounting evidence before the inquiry that Queensland’s retail petrol market lacks competition, particularly in rural and regional areas.

Currently, oil giants such as Shell and Caltex can set the sale price through their retailers, at the same time as collecting the subsidy.

When GST is included, Brisbane petrol prices should be 9.2¢ a litre cheaper than Sydney and Melbourne. But a state Treasury investigation found about 2¢ of that – the equivalent of about $125 million-a-year in petrol discounts – was not passed on to motorists in the first six months of this year.

Fuel Subsidy Commission of Inquiry head Bill Pincus, QC, told The Courier-Mail there were difficulties ensuring the subsidy was fully reflected in prices under the current system.

Premier Anna Bligh said the Government would consider price regulation if it meant its $541-million-a-year investment in the fuel subsidy was fully received by motorists.

Wynnum West residents Michael and Serena Brook said any benchmark would be “fantastic” as petrol prices took a toll on their budget.

“I don’t know why nothing seems to be be done about (the price of fuel),” Mr Brook said.

QUT law student Nikolina Orlic, 22, said that the price of fuel made it difficult for her to use her car.

“I have tried using those 4¢ vouchers, but I think you are paying just as much for fuel when you use them,” she said.

The inquiry’s Mr Pincus said it would be difficult to prosecute a petrol retailer under the Fuel Subsidy Act as it would require proof of the real petrol price without the subsidy.

An example of how the regulatory system would work is that when prices in southern capitals are $1.09 a litre, the price in Brisbane would be benchmarked at $1.

Those retailers who charged $1.05 would only be repaid 4¢ a litre by the Government, while their cheaper competitors could charge the benchmark and receive the full 8.3¢.

The system would also require different benchmarks around the state to reflect extra costs in regional areas.

The oil giants are expected to argue such a system could be the death of the weekly discounting cycle, which benefits motorists who fill up on the right days.

additional reporting Ursula Heger

http://www.news.com.au/couriermail/story/0,23739,22468465-952,00.html

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