NO.099

Acting Treasurer and Minister for Finance and Administration, the Hon John Fahey MP,

said the report on petrol prices released today by the Australian Competition and Consumer

Commission (ACCC) found that over the period from the week ending 30 June to the week

ending 29 September the actual rise in petrol prices was below the level that was

expected, taking into account the main underlying factors that influence petrol prices.

“The Commission’s analysis suggests that actual fuel prices have not

increased as much as expected on the basis of movements in underlying factors including

historical wholesale and retail margins. This is not inconsistent with the suggestion that

cost savings from the NTS changes have been passed on.” (ACCC report, p.2)

While the Government does not like the current level of petrol prices, the ACCC report

confirms the Government’s position that petrol prices in Australia have been largely

driven by international oil and petrol prices, in particular the spot price for Singapore

Mogas 95 unleaded, and the Australian and US dollar exchange rate.

The ACCC report examined the following factors which influence petrol prices:

• International petrol prices
• The Australian/US dollar exchange rate
• Commonwealth and State excises and taxes; and
• Discounting by oil companies.

The ACCC confirmed that cost savings available to the petroleum sector as a result of

the introduction of The New Tax System could be up to 1.6 cents a litre, higher than the

Government’s own estimate of 1.5 cents a litre.

The ACCC report also addresses the country-city petrol price differential and found

that it had decreased since the introduction of The New Tax System. While the ACCC comes

to no conclusions regarding the Fuel Sales Grant Scheme because it is currently inquiring

into whether the Grant is being passed on, it suggests that the Grant may be having a

positive impact.

20 October 2000