Within days of the start of US-Israeli military action against Iran in late February, some petrol stations in Australia had already hiked their prices significantly, leading to allegations of price gouging and petrol profiteering.
The Australian Competition and Consumer Commission (ACCC) and the federal government have responded with increased monitoring of prices, a beefing up of penalties for unlawful conduct, and promises to come down hard on any fuel companies caught taking advantage of the disruption to global oil supply chains.
But will this work to prevent petrol retailers from trying to cash in? And how can consumers avoid the worst of the effects every time they fill up their cars?
Queensland’s peak motoring body, RACQ, has referred a number of major fuel retailers to the ACCC for allegedly taking advantage of drivers by hiking prices significantly in less than three days after the war broke out.
“There is no good reason for fuel companies to be increasing their prices just days after conflict broke out in the region,” says Ian Jeffreys, RACQ’s principal economic and affordability specialist.
“Yes, we’ve seen an increase in the global oil price, but that usually takes around two weeks to flow through to bowsers here in Australia, not two days,” he says.
“South East Queensland is already at the expensive phase of the price cycle. Before this additional hike, many fuel stations were already charging more than 50 cents per litre above the average wholesale price.”
There is no good reason for fuel companies to be increasing their prices just days after conflict broke out
Ian Jeffreys, RACQ
Meanwhile, NSW motoring group NRMA has called the level of price hikes “completely unjustifiable”.
“With prices in Australia’s three largest cities already at the top of the regular cycle, half of the stations in our three biggest cities are effectively inflating that margin to take advantage of the community,” says NRMA spokesperson Peter Khoury.
“Australians are doing it tough with cost of living pressures, and now is not the time to be ripping the community off – we urge the ACCC to act.”
The federal government says it’s increasing scrutiny and surveillance of the fuel sector, shoring up fuel supply and increasing penalties for misconduct.
“The conflict overseas shouldn’t be an excuse to profit off Australians,” says Andrew Leigh, Assistant Minister for Productivity, Competition, Charities and Treasury.
“We’re putting petrol companies on notice. We won’t cop big corporates treating Australian consumers like mugs.”
Companies will face penalties of up to $100 million per offence for misleading conduct and cartel behaviour.
The conflict overseas shouldn’t be an excuse to profit off Australians
Andrew Leigh, Assistant Minister for Productivity, Competition, Charities and Treasury
Professor David Byrne, an expert in energy and resource markets at the University of Melbourne, says research has shown that during the COVID pandemic, the government talking tough on petrol companies and putting them on notice did have a small positive price impact for consumers.
“The ACCC has gotten very good at actively monitoring the situation. They have the resources, the data and the people in-house to monitor the wholesale price, what customers are paying and the split. In the past, we have seen fear of prosecution work to drive down prices,” he says.
The ACCC is monitoring petrol prices to deter petrol companies from profiteering.
Missed opportunity
CHOICE head of policy Morgan Campbell says when sudden prices rises happen, regulators are often limited in what they can do. The federal government last year giving the regulator new powers to tackle price gouging in the supermarket sector was welcome, he says, but also a “missed opportunity” to go further.
“When the government was looking at price gouging last year, we made two recommendations: ban it wherever it happens, not just in supermarkets, and specifically outlaw unfair price rises during shortages,” Campbell says.
“The government missed an opportunity, but as global disruptions cause prices to skyrocket again, it’s time to revisit this and give regulators the power to tackle potential price gouging across the economy.”
Meanwhile, state governments have been talking up the importance of price comparison apps to help customers shop around and find the best deal on fuel. Melbourne University’s Byrne says the more customers use price apps, the bigger impact it has on competition in the marketplace.
“The more, in effect, that we’re able to pit the companies against each other to bid for your business, to keep the prices low for your demand, the more we are going to be able to keep the companies in check,” he says.
“We can’t know how long this war will go on and we can’t stop global oil prices going above $100 per gallon, so some of that we are going to have to eat at the bowser. But there are some things we can do,” he adds.
Jarni Blakkarly is an award-winning Investigative Journalist at CHOICE. Jarni has worked for news organisations such as SBS, Reuters, Al Jazeera English, ABC 730, Radio National, BBC World Service and Deutsche Welle.
Jarni won the Walkley Foundation's young journalist of the year student category award in 2016 and was the recipient of a Melbourne Press Club Michael Gordon fellowship in 2022. In 2023 he was a highly commended finalist in the Quill Awards and a winner at the 2024 Excellence in Civil Liberties journalism awards. In 2024 he was elected to serve on the Federal Council (National Media Section) of the MEAA. Jarni has a Bachelor of Communications (Journalism) from the Royal Melbourne Institute of Technology (RMIT). LinkedIn
Jarni Blakkarly is an award-winning Investigative Journalist at CHOICE. Jarni has worked for news organisations such as SBS, Reuters, Al Jazeera English, ABC 730, Radio National, BBC World Service and Deutsche Welle.
Jarni won the Walkley Foundation's young journalist of the year student category award in 2016 and was the recipient of a Melbourne Press Club Michael Gordon fellowship in 2022. In 2023 he was a highly commended finalist in the Quill Awards and a winner at the 2024 Excellence in Civil Liberties journalism awards. In 2024 he was elected to serve on the Federal Council (National Media Section) of the MEAA. Jarni has a Bachelor of Communications (Journalism) from the Royal Melbourne Institute of Technology (RMIT). LinkedIn
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