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Canberra fuel pricing synchronising within eight cents of Sydney’s

Average fuel prices in Canberra are sitting closer than ever to Sydney’s pricing, with the opening of Costco Wholesale Fuel and launch of the ACT Fuel Watch Facebook page appearing to have significant affects on an otherwise stagnant market.

As seen in the below graph, figures from the Australian Institute of Petroleum show that in December last year the price of petrol in Canberra dropped significantly from the relatively stable $1.50 mark to a record low of $1.17 on average per litre.

Canberra fuel pricing
Canberra’s fuel experience a sharp drop in December 2014

The arrival of Costco fuel in December 2014 was long awaited and initiated a price war with the nearby Caltex Woolworths station in Majura Park.

Costco's fuel price was only matched within a 3km radius
Costco’s fuel price was only matched within a 3km radius

While there is no doubt Costco did offer cheaper wholesale prices than most, a pricing snapshot of the ACT region shows that only a few other stations close to Majura park competed.

I spoke to Ben Ling, the founder of the ACT Fuel Watch Facebook page, about the impact of Costco’s pricing across the Canberra region.

“Woolies have a rule where they’ll compete within a 3 km radius. So whatever’s going on in a 3 km radius, they’ll want people to drive to them. They’ll match other stations begrudgingly. People turn around and say [cheaper fuel prices] is thanks to Costco. It is and it isn’t. It is because they were offering cheaper prices. It isn’t because they didn’t affect a single other station outside of the area.” He said.

When looking at fuel pricing data from Sydney over the same time period, a significant drop was also experienced.

Ben states the drop in both Canberra and Sydney is due to number of factors, largely the gate price of fuel and the international price of oil at the time.

Sydney also experienced a sharp drop in December 2015
Sydney also experienced a sharp drop in December 2015

“The fuel prices are set in Singapore and largely governed by the Singapore gate price because that’s where it’s refined,” he said.

One significant ongoing affect on Canberra’s pricing is that of increased transparency from the launch of the ACT Fuel Watch page. The page regularly posted and ranked the price of each Canberra fuel station, urging customers to fill up at the cheaper stations. Prior to the page, Canberra’s fuel price remained stagnant and approximately 15 to 20 cents higher than Sydney’s pricing, sitting at around $152. This was despite Sydney’s pricing fluctuating up and down and the reported fuel transport costs of around six to eight cents to get the fuel from Sydney to Canberra.

Since the page launched in January, the increased transparency and more competitive pricing across the region has seen Canberra’s fuel progressively sit within eight cents of Sydney’s price cycling from February onwards.

Canberra's fuel price appears much closer to Sydney's since the arrival of ACT Fuel Watch
Canberra’s fuel price appears much closer to Sydney’s since the arrival of ACT Fuel Watch

“In some instances [Canberra was] 30 cents higher than Sydney before the ACT Fuel Watch page launched. The transparency [of the page] is helping us stay there. The transparency has kind of glued the situation together a little bit. That’s probably the main benefit. The prices have sort of come up and down but now they’re in the middle and moving with the Sydney market.” Ben said.

Whether this trend will continue for the long term is yet to be seen, however three months since increased transparency on fuel pricing and the prices appear to still be synchronised.

More information on fuel pricing in Canberra can be found on ACT Fuel Watch’s website or PetrolSpy.

Matt O’Brien

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