Lismore locals pay more for petrol

LISMORE is among the most expensive places to buy fuel in all of New South Wales and Queensland.

The city came out head and shoulders above the rest in a survey of the most expensive unleaded petrol prices in 14 regional centres in the two states.

The cheapest regional centre on the list was the Sunshine Coast, just north of Brisbane, and Toowoomba, west of Brisbane, which both had unleaded fuel selling for 116.9 cents per litre. The same fuel 200km to the south, in Lismore, is selling for 130.1 cents a litre.

Lismore also topped the list for the cost of diesel fuel, selling for 132.6 cents a litre, compared to a low of 123.6 at Toowoomba.

The high prices on the Northern Rivers would not come down until the Federal Government starts forcing big operators to stop undercutting independent servos, Service Stations Association chief executive Ron Bowden said.

Mr Bowden also issued a warning to motorists in Australia’s big cities, saying they could expect fuel prices to start rising there too, as independent operators were forced from the market.

In the survey, the Northern Rivers was relatively competitive when it came to liquid petroleum gas (LPG).

Lismore’s price of 69.4 cents a litre was better than six of the 14 regional centres. The best price for LPG was 56.3 cents a litre at Ipswich, while the worst was 73.9 cents per litre at Rockhampton.

Oil companies and the ACCC have said the high regional petrol prices stem from a mix of factors, such as a lower customer base in regional areas and the distance fuel has to be transported.

A Caltex spokesman said different towns also had different dynamics that impacted on the amount of fuel sold and, therefore, the price it was sold at.

Mackay, for example, as a mining centre would have a much higher demand for diesel than Lismore, which would create economies of scale that drove prices down.

Grafton would also be likely to have a lower petrol price than Lismore because it was on the highway. A clustering of service stations along with a higher level of passing traffic meant more fuel would be sold, which, in turn, meant lower prices.

Another thing impacting fuel prices was the business model used by a service station. The spokesman said some sites relied on fuel sales for profits, but others relied on convenience store sales, using cheap petrol as a way of attracting customers. Some relied on a mix of the two.

However, Mr Bowden said the high prices in Lismore were a hallmark of a non-competitive market. Service stations on the Northern Rivers are dominated by BP, supplied by Melbourne-based company Reliance Petroleum, and Caltex.

In recent years, the region has also seen a rise in the number of Woolworths and Coles-branded petrol stations. The most recent arrival in that market, at Byron Bay, replaced a long-standing independent operator.

Mr Bowden said competition among service stations relied on independent operators, but the ability of big operators, and particularly supermarkets, to undercut made it difficult for those independents to survive.

“I know when the supermarkets try to have a go, they can sell it at six cents a litre lower than the prices independent operators buy at,” Mr Bowden said.

“Service station closures have doubled since the supermarkets got into the game. Even Exxon-Mobil, one of the biggest oil companies in the world, has pulled out ... it’s terrible news for competition.”

A spokeswoman for Woolworths petrol denied the company subsidised its fuel to undercut other service station operators.

However, she said the firm’s supermarket division did pay its petrol division a ‘marketing’ fee to cover the cost of discounts provided through shopper dockets.

The spokeswoman said petrol was a low-margin business, offering a profit of about two cents per litre. She denied the company had any role in the decline of independent operators.

The spokeswoman said the independent sector had been declining since the 1980s, but Woolworths did not begin selling petrol until the late 1990s.

She also rejected suggestions Woolworths would use discounting to drive out competitors and then set a higher price, saying that had not happened anywhere in the company’s 85 years.

Mr Bowden disagreed.

“If you think in the future you’re going to continue to get supermarkets being generous with petrol prices once they have control of the market, you have rocks in your head,” he said.

The solution was to introduce, and enforce, rules requiring oil companies to sell at the same wholesale price to all players in the market, including independents, and to ban individual service stations from selling at below cost, he said.

Those practices, or variations on them, had been introduced in countries across the world, such as parts of the US, the UK and Germany.

However, politicians here appeared too worried about a short-term voter backlash in cities as below-cost discounting ended and the wholesale price of fuel levelled out.

“(South Australian independent Senator) Nick Xenophon and Barnaby Joyce put up a Bill to do something about it and they were laughed out Parliament,” he said.

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