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Herald Sun (Australia): Shell website admits to pre-Easter price spike

Ellen Whinnett
March 22, 2008 12:00am

OIL giant Shell has been exposed ripping off Victorian drivers by boosting its margins ahead of the Easter break.

As tens of thousands of motorists filled their tanks on Thursday to head off for a family break, Shell petrol stations increased their margins substantially, raking in 17.5 cents for every litre of petrol.

The boosting of the margins led directly to a rise in the price of fuel, which has now broken the $1.50 mark in some areas of the state.

The cash grab came on one of the busiest days of the year at the bowsers.

It compares with the 28-day average margin of 10.8 cents for every litre of petrol sold.

The information, published on Shell’s website, proves price rises are not always connected to international oil prices as petrol companies claim.

And while Shell’s retail margin fell a little yesterday to 14.7 cents, it still remains much higher than the 28-day average, which rose slightly to 11.2 cents yesterday.

After near-record prices of $1.47 across Melbourne on Thursday, petrol prices eased slightly yesterday to an average of $1.44, according to the Shell website.

But three centres in regional Victoria — Bright ($1.50), Warracknabeal ($1.50) and Stawell ($1.53) — breached the $1.50 benchmark — a price consumer watchdog ACCC chairman Graeme Samuel this week described as “unjustifiable”.

A localised price war saw prices dip yesterday at Ballarat ($1.39) and nearby townships Creswick ($1.35) and Warrenheip ($1.39).

A Shell spokeswoman said the price rises were part of the usual weekly price cycle, and followed very low margins on Monday and Tuesday.

“Historically, the weekly retail price cycle dips to its low point on a Monday and Tuesday, and reaches its highest point on a Wednesday and Thursday,” the spokeswoman said.

“As a result, the wholesaler and retailer margin on a Monday and Tuesday will be far lower than what’s shown on a Thursday. Most consumers take advantage of this by purchasing fuel on Monday and Tuesday, the cheapest days of the week.”

She said Shell was a wholesaler, not a retailer, and set its wholesale prices based on Singapore’s fuel market.

The company says on its website that the Shell retail margin is not a profit margin, and instead takes into account the cost of transporting the fuel and paying wages and administration costs at the service stations.

But the website does not spell out why margins could leap about so much — and be passed on to motorists through increased fuel prices.

RACV spokesman David Cumming blamed the big grocery retailers for artificially inflating the prices in order to offer a 4c discount on fuel.

He said he was comfortable with the weekly price cycle, but believed it rose too far to compensate for the grocery-sellers’ fuel discounts.

“Previously it used to be around 10 cents (weekly price peak), now it’s around 14 cents because they have to have their 4c discount built in,” he said.

“They’re actually discounting below cost on Tuesdays and Wednesday. It is unfortunate it does go so high and it doesn’t do them any good.”

Mr Cumming said the only way to fix the problem would be replace the system with a regulated market — a move which he said would result in higher average prices.

“I’m happy to see the price cycle stay if it could be levelled out to, say, 10 cents like it used to,” he said.

http://www.news.com.au/heraldsun/story/0,21985,23413569-2862,00.html

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