Fuel for thought

It’s 4pm on Friday the 16th of May and I’ve seen my last patient and like many motorists I’m looking for a good deal on a full tank of fuel for the weekend.

By the time you read this you’ll be surprised to know that I’ve seen ULP as much as $1.48 per litre, but there’s still the odd servo at $1.38 so I better pull over soon.

Like many other motorists I haven’t got the time or patience to queue for fuel on a Tuesday so I’ll pay through the nose later in the week for my tardiness.

I’ve already accepted that because I didn’t fill up after my clinic on Tuesday night that I’ll be paying an extra 10 to 14 cents a litre compliments of the wonderful mathematics of the so-called “fuel cycle”.

You see fellow motorists this quirky pricing structure means that every weekend the price of fuel goes up by 10 percent, but we don’t have to worry because the duopoly of the supermarket chains and my customer loyalty means that my family’s $300 weekly food bill will give me a handsome $2 discount (0.67%) on my tank of fuel, wiping out independent fuel retailers and competition in the process.

And none of us need to be concerned that Woollies and Coles are conspiring to screw motorists because they only have 65% of the fuel market and it’s purely coincidental that the prices at their service stations change within minutes of each other when someone decides to lead the market back up.

Despite the best efforts of government inquiries they still haven’t been able to crack the code of the Australian fuel cycle phenomenon even though investigators have stopped price-fixing in concrete, air freight and cardboard packaging and there have been prison sentences and hefty fines to boot.

The solidarity of the fuel industry leads me to suspect that oil company executives have done their apprenticeship with cigarette companies and they surely must be equipped with cyanide tablets lest the ACCC finally gets one to start squealing.

But we all need to understand that fuel is just a commodity that’s traded in a market and that the forces of supply and demand will ultimately dictate its price.

It’s a lot like the medical procedure of breast augmentation. As a highly valued and essential part of our lives it commands a price premium for our cosmetic surgeons, whereas less important services such as attending a sick patient at home in the middle of the night deserves a lesser rate of remuneration.

So as I drive around aimlessly watching fuel prices creep up like the jackpot on a poker machine I suddenly see a mirage.

It’s a Coles Express outlet selling fuel for $1.26 or 12 cents a litre cheaper than Woolies.

I race to check my Blueberry just to make sure I haven’t got my days mixed up, but it’s true, or too good to be true, depending on how you look at it.

And then I suddenly recall that Coles Express was singled out last week for leading the market up in four state capitals and then I see the logic.

An observant government department has finally done the maths and seen a pattern of price gouging that my hip pocket nerve had already noticed years ago.

It’s time to camouflage the cycle with smoke and mirrors at least until the next Nigerian sabotage or terror threat or any other excuse that takes their fancy.

My personal theory about the fuel cycle recalls that as a high school student in 1973 with a job as a bowser boy that 50% of the fuel sold in a week was sold on Fridays and Saturday mornings (service stations closed at midday).

People were paid in cash on a Friday and would fill up their cars on their way home from work.

Fuel companies worked on the premise that they gained market share by having an outlet in every suburb and the government regulated the price at 14 cents per litre ($1.11 in today’s money).

Petrol was the same price every day of the week and all the customers thought it was too expensive and complained.

Discounting the price of petrol was illegal, but I worked at a Golden Fleece servo and my employer was the Union Co-operative Society which was run by the union movement and closely linked to the ALP.

Loyal customers could legally re-deem 10% of their fuel expenditure on non-fuel items in the shop (oil etc) saving them a genuine 1.4 cents per litre off or 11 cents per litre in today’s money.

I still think that life was simpler (and a lot more transparent) back then.

For anyone interested in how our average fuel prices compare internationally please check the table below.

Friday 16.05.08 ULP Diesel
Australia (Brisbane) $1.38 $1.55
New Zealand $1.53 $1.27
UK $2.33 $2.60
USA $1.07 $1.28
France $2.23 $1.95
South Africa $1.30 $1.50
Canada $1.38 $1.43
Singapore $1.63 $1.36

Queensland has an 8 cents per litre fuel subsidy. New Zealand diesel motorists pay an extra Road User Charge which equates to 35 cents per litre on top of the pump price. Australian motorists pay 51 cents per litre in tax. US motorists pay 20 cents per litre in tax.

Safe motoring,
Dr Clive Fraser

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    Medical Motoring is an online record of the articles written by Dr Clive Fraser and published in the Australian Medicine magazine by the Australian Medical Association.