A hairy-eyed Terry McGee is taking time to refuel, but in his final column in this series, he turns his sights on “transparency, exposure and customer pressure” – and prepares a gift with a difference for the competition head watchdog.
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I’ve looked everywhere, but can’t find it!
I’ve looked in the Bible, the Koran, the Torah, the Magna Carta, the American Declaration of Independence and their Bill of Rights.
I’ve even checked out the Kama Sutra (which at least proved otherwise interesting).
Neither Dickens nor Jane Austen touched on the subject. The Australian Constitution says nothing, nor does the UN Declaration of Human Rights.
I even checked the TV Guide and the form guide for Randwick. Nowhere does it say we must use deregulated competition to determine the price of fuel in regional NSW.
So who came up with such a nutty scheme?
A fellow by the name of Costello, apparently, treasurer in the Howard Government. It was 1998, and the stated aim was to cut prices to consumers.
Given the aim, the method chosen was surprising.
They removed the cap on the maximum wholesale price, and prevented the Australian Competition and Consumer Commission (ACCC) from monitoring the results. That’s gunna work.
Wind on 17 years and we see how it worked out.
Reasonable prices in Sydney, perhaps, but totally unreasonable prices in the Eurobodalla.
Thanks, Pete and Johnny, though, to be fair, the other side of politics seems to have been equally taken in.
Competition might work in downtown Sydney, but why would it also work in the regions, where the commercial environment is so different?
Were they completely out-to-lunch? Are they still?
Why should regional customers subsidise city prices? Because that’s what we’ve been doing.
What might work?
I don’t know – I’m not an economist, but maybe that’s a good thing - I’m not blinded by economic theory.
Perhaps we should go back to a regulated price? Could it have been worse than this?
Or perhaps there’s room for a mix’n’match – a regulated maximum price, but some room to move under that cap to encourage competition?
I’d be attracted to a scheme which allowed genuine competition to set the price in the city, but then required that price to apply in regional areas too, with allowances for identifiable additional costs, such as transport.
The keywords there are “genuine competition” and “identifiable costs”.
Who should determine and monitor these mark-ups?
The oil companies? We saw where that got us.
The ACCC? Do we want a toothless watchdog slobbering on our cars?
The federal or state governments? They’ve allowed this to go on for 17 years.
How about your local council?
They know the operating environment. They can see the balance required: prices too high – ratepayers suffer; prices too low – service stations shut down and ratepayers suffer; prices just right – everyone complains, but nobody suffers. You want to sell fuel in our region, you negotiate with the council?
But maybe nobody would want to take responsibility for this chestnut? A poisoned chalice? None of the glory, all the blame?
Is it down to us? ACCC Chairman Rod Sims, quoted in Fairfax Media on January 15, seemed to think so.
“I don’t think we should underestimate the importance of transparency and exposure, and also consumer pressure,” Mr Sims said.
“If we were to look at a town and find there were very high profits being made, than that exposure will lead to such a backlash, the prices will come down.”
A town where very high profits were being made? Over here, Rod!
But does exposure have any effect?
The Bay Post/Moruya Examiner has covered petrol pricing and consumer upset regularly for several years, including comparing prices and directing queries to the ACCC and suppliers.
On December 9, the federal government directed the ACCC to monitor prices, costs and profits relating to the supply of products in the petroleum industry in Australia for three years and to produce quarterly reports. In January, Eden-Monaro MP Peter Hendy publicly requested the watchdog investigate petrol prices in the shire.
From January 28 to 30, a group of consumers organised a three-day boycott of the major suppliers in Batemans Bay.
The first weekly Hairy Eye was published in the Bay Post/Moruya Examiner on February 27, bringing the issue into sharper focus and graphing changes.
Can we detect an improvement?
A glance at our graph says ‘yes’. Up to December 21, you can see gouging in Batemans Bay (indicated red). There was gouging still in both Batemans Bay and Moruya (purple) until late February, but since then, prices have been very close to the ACCC expectation (yellow dashed).
So, yes, Rod Sims, public exposure does seem to keep a lid on prices, but you mentioned another necessity, “transparency”.
The Hairy Eye has also highlighted how non-transparent the industry data sources are. Professionally opaque.
If you expect ordinary citizens to police gouging, you have to give them the data and tools to do it. Expect a letter on this subject, Rod, some suggestions and your own boxed set of Hairy Eye reports.
There is much more we have found out, and much more we could discuss, but perhaps this is a good place for the Hairy Eye to refuel, and return you to normal programming.
However, don’t breathe a big sigh of relief, Fuel Industry, because we’re still watching - and if we have to come back, we’re going to be very hairy indeed.
With special thanks to the Bay Post, for dedicating so much space and effort to this important issue.
Related coverage: Hairy Eye on Fuel