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Don’t fill up in Broken Hill, says RAA

Monday, 22nd September, 2014

By Michael Murphy

The Royal Automobile Association is telling travellers to avoid filling up in Broken Hill unless they want to pay high petrol prices.

The RAA says fuel retailers were damaging the city's reputation because they had not passed on savings from cheaper wholesale prices.

Broken Hill is paying 10 cents a litre more for unleaded petrol and diesel than people at Yunta and Mildura.

Port Augusta is the standout regional centre. Petrol there is almost 20 cents a litre cheaper than the Silver City, saving motorists about $10 a tank.

"Somewhere like Port Augusta, the gateway to the outback, is fast getting a reputation as a refuelling hub," said RAA senior analyst Chris West.

"Broken Hill needs to consider how they want to position themselves in the fuel market," he said.

"As a motoring club, the advice we are giving motorists is to fill up outside of Broken Hill."

Mr West said wholesale prices dropped about 10 cents seven weeks ago.

"Even places like Ceduna, on the far end of the state, saw an eight cent reduction ... Broken Hill did not see anything."

He said all the retailers in Broken Hill were matching each other, and suggested the local price should be around the high $1.40s or low $1.50s.

The current price in Broken Hill is about $1.58 for unleaded petrol and $1.60 for diesel.

"They are not being competitive, they are not undercutting one another ... they feel like they can get away it with because they feel motorists have to pay the price they set," Mr West said.

"All it takes is for one in town to start undercutting for their typically to be a response."

The price of petrol in Broken Hill is controlled by a mix of independent retailers, resellers and major companies. Caltex only controls the price at its Oxide Street location.

"We make sure our high-quality fuel is available to customers at a competitive price," a Caltex spokesperson said.

"Whoever sets the price of fuel at a given site will take into account all the operating expenses associated with the business, including rent, wages, power, water, maintenance and branding," he said.

"Sales of convenience products can also assist a service station operator to cover these costs."

He said price changes took time to flow through to regional areas, but he would not speculate about when the price would drop locally.

"Our operated site in Broken Hill relies on local customers and travellers," he said.

"We are confident travellers will continue to visit Broken Hill on their journeys."

The price of fuel at the Shell Memorial service station in Williams Street is set by Coles' head office in Melbourne.

A spokeswoman for Coles did not answer questions but referred BDT to an Australian Competition and Consumer Commission report compiled last year about petrol prices.

The report said prices in regional locations in Australia were typically higher than those in the capital cities, although they generally tended to follow the same overall
price movements.

Last month, the ACCC instituted proceedings in the Federal Court of Australia against a website called Informed Sources and several petrol retailers in Melbourne.

The ACCC alleged the website allowed retailers to communicate with each other about their prices, and that these arrangements had the effect or likely effect of substantially lessening competition in Melbourne markets.

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