Fuel price cap in wings

Plan to ‘provide certainty’ for motorists

A PLAN to set a weekly cap on the amount motorists pay for petrol has been floated to prevent gouging by fuel companies and service stations.

Price monitoring body FUELtrac general manager Geoff Trotter says setting the pump price at a level 20 cents a litre above the price when it arrives at the terminal would allow wholesalers and retailers to make reasonable margins while providing certainty and transparency for consumers.

“It would remove these price hikes/spikes and no doubt eliminate the price cycles so there’s no need to chase prices and no opportunity for oil companies to manipulate these price cycles,” he said.

The peak body for service stations says such a move would double margins and profits for retailers in major metropolitan areas but put regional owners out of business.

“It’s a preposterous idea,” said Australian Convenience and Petroleum Marketers Association CEO Mark McKenzie. “It would reduce the volatility in the market but you would get less discounting ... and over time result in less competition.”

RACQ head of public policy Rebecca Michael said not only would a cap lock mean record margins, “but year after year they would come back to government and argue for an in- crease in the cap.” The motoring organisation is lobbying for the introduction of a government real-time petrol pricing app for consumers to compare what service stations are charging at any time.

The measure is also supported by the Australian Competition and Consumer Commission and, following early resistance, the Palaszczuk government is now considering it.

Dr Michael said RACQ research showed that the FuelCheck online tool in New South Wales had saved Sydney drivers an average 1.4c per litre.

Queenslanders could expect a similar drop.

Energy Minister Anthony Lynham said the government “would have to ensure that it did not add any red tape that would inadvertently add extra cost to the price of petrol”.

But Mr Trotter says that without a price cap, the measure would be a waste of taxpayers’ money and could backfire, pushing prices up.

“These government fuel sites may be helping oil companies and retailers move their prices faster and higher than before as they now force all retailers to post prices, making it easier for all participants to see the whole market at any given time and they can choose to react accordingly,” he said.

“You can’t call it collusion, because it’s actually being facilitated by the government.”