Petrol pricing

[fenderbelly]

On Sunday morning i decided to go to the city for a few days, i knew i didn't have much fuel and as we don't have fuel in the the town i live in i stopped at the next town to fill up. $1.62 a litre. As it's a three hour drive i filled the tank.
As i got close to the city i see petrol $1.55 Per litre. When i get into the inner superbs it's as low as $1.42.

How do they justify 20c a litre difference.

[Twisted Tenon]

One word Fred "gouging" or government sanctioned daylight robbery

TT


Thats's more than two I know......

[Master Splinter]

Nothing government sanctioned about it; it's just capitalism in action.

You'll pay more because there is no competition forcing the price down, and no-one else wants to set up a gas station in your area as it'd inevitably end up as a low margin, low turnover outlet.

As long as the price differential doesn't make it cheaper to drive XXkm to the next town with a gas station, it'll stay higher.

(I just paid $1.55 for 95 octane today; I'd love to be able to get inner Sydney prices, too!)

[Handyjack]

To put it politely, if you need it or want it, you will pay what the price is.

It is probably still cheaper and more convenient than running out of fuel when more than a fem minutes from a fuel station.

[Bushmiller]

(I just paid $1.55 for 95 octane today; I'd love to be able to get inner Sydney prices, too!)

Hmm....

I'd like to get standard unleaded for that price . But you are right about the economic laws of supply and demand.

Just occasionally we are cheaper than Brisbane, but not so often they all want to come and live here . There is also the phenomena where the price goes up and down through the week. That of course is market manipulation at it's most vigorous.

Regards
Paul

[Master Splinter]

The Australian wholesale price for petrol is mostly set by the price in Singapore and follows it pretty closely, but with a one to two week lag; the more volatile the price, the longer the lag.

Freight costs to country areas are typically four cents a litre more, and there can be double handling (port/tanker/regional depot/tanker/regional station rather than port/tanker/city station) which also adds to the cost. Regional stations may get a tanker a fortnight, while city stations can get a tanker a day.

But you should take it in a broader perspective - fuel might cost you more in the regions, BUT you're unlikely to get charged the same amount to park your car (in Canberra, that's between $8 and $12 a day; in Sydney CBD, $20-$60 + road tolls).

[rrich]

The simple answer is because they can.

The very complex answer is that what we learned in Economics 101 doesn't really relate to the real world.

As simply as possible:
If the market has the capacity to consume 1000
If the total supply for this market is 1100
And I control 200 of the supply

What I will do is keep 100 in reserve and raise the price on the 100 that I deliver to the market. The market is now completely satisfied in the supply vs. demand in the Economics 101 theory. What will happen is that everyone else that supplies the market will eventually raise their prices to match my prices because they see me selling to the last 10% of the market.

What our governments fail to recognize is that the oil market is a controlled and manipulated market. The lessons of Economics 101 theory that we all learned in college don't necessarily apply in this pseudo free market.

[Boringgeoff]

The servo owner where I live sets his price when he gets his tanks filled and leaves fuel at that set price until he needs another fill. Then the price may rise or fall depending on what he has to pay for the refill. Consequently his prices are sometimes lower than other towns and sometimes higher. The daily rise and fall of others is as TT said "gouging"

Geoff.

[BobL]

and wot about the Diesel underclass!!!

[Bob38S]

We keep getting told that it's all about competition - if you believe that, then the Easter bunny, Santa and the tooth fairy are real.

When we have so few competitors you you don't get competition you get retail price maintenance -deals done at levels we never see. Our government is not "hands clean" in this as it is totally in their interest to see the price high - don't forget the 38 cents tax and then the GST added on top for every litre.

If the government were really serious, we would go back to what we had in the late 60's when petrol went to 40 cents a gallon. The price was regulated and 1cent was added to the large city prices so that it covered all of the "extras". Then it didn't matter if you were in Mt Isa or Brisbane you paid the same.

Petrol is not a luxury in Australia, until we vastly improve public transport in quality, quantity and cost petrol is a necessity for all not living in the mega urbanised areas of this vast country. When I say petrol I am also including diesel and gas.

[Sebastiaan56]

Great explanation Rich. It's like being the winner in monopoly, 80 years down the track.

[Master Splinter]

But if you have 100 units sitting there in reserve, that's an unproductive asset - even assuming it's not costing anything to store those 100 units, the money you have tied up in them could be put to more economically productive use. Otherwise it's like having a rental house that's sitting vacant and you're not looking for tenants.

[fenderbelly]

well, i made the return trip home today.

Filled up at $141.5, handed in a shopper docket and got an extra 4 cents a litre off.
A case of swings and round abouts i think

[Bob38S]

Not wishing to be the wet blanket....but....check the maximum number of litres you can get for the shopper docket - X this by $0.04 - it ain't that much. I understand that something ( in this case) is better than nothing but think about how much extra you have paid at the supermarket to get it. The supermarket/ petrol/ alcohol conglomerate doesn't give $0.04 per litre for nothing.

The he only thing you get for nothing is nothing - with regards the supermarkets - somewhere, somehow, someone has to pay.

If the supermarket servos can sell it for $1.41 they won't be selling it at a loss so any price above that can only be interpreted as gouging and is a blatant rip off.

[Twisted Tenon]

The simple answer is because they can.

The very complex answer is that what we learned in Economics 101 doesn't really relate to the real world.

As simply as possible:
If the market has the capacity to consume 1000
If the total supply for this market is 1100
And I control 200 of the supply

What I will do is keep 100 in reserve and raise the price on the 100 that I deliver to the market. The market is now completely satisfied in the supply vs. demand in the Economics 101 theory. What will happen is that everyone else that supplies the market will eventually raise their prices to match my prices because they see me selling to the last 10% of the market.

What our governments fail to recognize is that the oil market is a controlled and manipulated market. The lessons of Economics 101 theory that we all learned in college don't necessarily apply in this pseudo free market.

Economics joins the long list of stuff I know just enough about to get me into trouble, but.... isn't this the law of Supply & Demand? by holding 100 in reserve you are in effect artificially manipulating the price. That is why I call it government sanctioned gouging. The Feds love the tax. I agree with rrich in that it is a "pseudo free market" We are buying a consumable which has a floating price set by a shadowy organiastion in Singapore. If woolworths did this for say a kilo of sugar there would be questions in the House. And as far as those petrol dockets go, I have a 60 Ltr tank and have yet to get enough to buy a cup of coffee with the discount.


TT