Is Petrol Price Really a Rip-off?
Australians are nationally obsessed with the price of petrol - despite having the fourth-lowest fuel price (and the fourth-lowest fuel tax) in the developed world
QUESTION
I am a long time viewer and love your content. A special note and thanks for your war on BS and the idiots around it.
I have an interesting one for you regarding fuel prices if you wish to have a dig. Your comments of the following email and responses would be appreciated.
But first a quick overview of why I am writing. Basically I thrown in to an extremely irritated state over the grand final weekend to the point of having to write an email to BP about a monumental pricing trends stuff up. Basically 30c added to local price for two days: Thursday to Saturday, when the rest of the local stores and most of Melbourne stores (BP and not) remained at $1.05 to $1.08.
Hmmm... Sweet rip-off.
Anyway, below are some emails and the almost pre-prepared response directed at the general idiot. Which again irritated me. Please do a story about Fule rip offs, or a new review in that most unique way you do.
Regards,
Rhett
ANSWER
Hello Rhett,
You might not like my take on this, but at least you’ll get an honest response. And I do appreciate your enthusiasm for my reports. Here goes with the basic snapshot:
- Individual stores set their prices as they see fit.
- Nobody is compelled to buy.
- Australian law prohibits price fixing.
- Fuel is cheap - who gives a toss if it is $1.29? I mean, of all the issues that beset us?
Obvious question: why not shop around next time? You know - be a smarter consumer. Next time, wait for the tank to get half full, cruise around for a bit in the course of normal driving, and stop at a relatively cheap servo.
Retailers want the highest fuel prices they can get; consumers want the lowest. This is the same for all products and services. Conflating this to ‘being ripped off’ on the issue of fuel is absurd. I’m also somewhat critical of people who play the victim card on this. It moves me to wonder if there was a gun at your head at the time of purchase, because you could have moved on.
The difference between $1.09 and $1.29 for a tank of fuel is just $10. Who cares? It’s a trivial sum. Even if you pay it once a week. And the fix is: Buy it elsewhere if it offends you. Being loyal to a fuel retailer is absurd.
BP would get thousands of e-mails like yours a week - some a lot nuttier, obviously - so expecting a bespoke response is absurd. They really don’t owe you one. (You are getting one from me - which you probably don’t like - but at least it’s honest.) You wasted aeons of time getting indignant over $10. I don’t get that. Life’s too short mate. If you get ripped off by $10, surely this entitles you only to $10 worth of indignation?
This collective Australian nutbag obsession with the price of fuel has to stop, We have the 4th cheapest fuel in the OECD and the fourth lowest taxation on it. Access to this marvellous product bestows upon any chump with $50 and a shitbox Camry the level of mobility a Roman emperor would envy.
A perverse thing about human nature is that instead of getting up and high-five-ing the universe because you exist in this miraculous era, many people - including you - prefer to bitch about the price of fuel.
I really don’t get it. Objectively it’s nuts. Sorry.
Sincerely,
JC
Check out the independently standardised fuel consumption of any car here: www.greenvehicleguide.gov.au (Bear in mind that real-world fuel use is generally about 30% greater than that which is specified in the standard tests.)
RHETT'S E-MAIL TO BP
Dear BP,
I write to you today as I am rather irritated at an event that took place at your Caroline Springs BP chain store and hence my Local BP.
I regard myself a rather loyal customer, who does trend to only by my fuel from that store despite general fluctuations in the baseline price and even in extended periods of moderately higher prices. I fill all of my cars at this store.
Over the long weekend I filled up at this store only to be shocked at the massive, and I do mean massive spike in fuel prices.
Although I do understand the need for forecasting, demand and price adjustments, it appears that your forecasting team really got this one wrong.
Not only did the prices quickly jump up to $1.299 on Thursday the 29th of September, but unprecedentedly quickly they dropped back to the baseline of $1.05 on the following Saturday morning. Thats 2 days of extraordinary price hikes. I later find after the irritation of filling up my car that the prices only a few hundred meters down the road and in fact the close to the rest of Melbourne and all my other local stores were close to $0.25 Cents cheaper then this BP store.
Yes I do have a Velocity card so I did get a few extra points but really a hard payoff to swallow. I write today to express my most elevated irritations I have experienced in years. I do not find myself in a very loyal position right now or wanting to continue sourcing my fuel from BP, nor wanting to except in store convenience prices for my road trips with my family. I also do not find myself wanting to promote BP Stores and related products to my family or friends or general community, and i am seriously thinking of actively discouraging BP patronage altogether at every opportunity that I would be presented with in the future.
I am bitterly disappointed and extremely irritated that the general public and myself can be thought of and expected to put up with such a clear abusive use of market power and price manipulation.
Utterly disappointed, to the extent of needing to write to BP. Any response would be welcomed and preferable to no response.
My Kind Regards
Rhett
BP's RESPONSE
Hi Rhett,
Thank you for your feedback regarding the pricing. The Australian fuel market is based on the Singapore barrel price, not the US barrel price for crude oil. Any drop in refined petrol prices can be quickly offset by declines in the Australian dollar. The Singapore barrel is a refined product and to adhere to the Australian fuel standards the product must then be further refined once received in Australia, hence incurring further costs. The fuel must then be distributed throughout Australia.
The price of fuel differs at sites as it reflects costs associated with transport, storage, local area competition and the cost of running the site. BP independently sets a national price for its company-owned stores and monitors and reviews its prices every day. We will sometimes change our prices in different locations to ensure competitiveness in the market and this can lead to price variations even within similar geographies, but this is in the nature of competition.
BP aims to be extremely competitive with our fuel prices across all our company-operated sites, as it is a significant part of our business and part of our policy. Unfortunately we can’t always match or sustain heavily localised discounting across the entire market or across our entire portfolio of products. There are also a number of independent BP operators all around the country who set their own prices and manage their own operations.
For further information you may like to refer to the Australian Institute of Petroleum’s website which has a breakdown of the factors that influence the price of petrol at the pump: http://www.aip.com.au/pricing/facts/Facts_about_Petrol_Prices_and_the_Australian_Fuel_Market.htm
We are unable to comment any further on on fuel prices. However, we hope the answers we have provided will mean you remain a BP customer, but we completely understand that you have a choice and we thank you very much for taking the time to contact us.
Kind Regards,
Rebecca Mackie | Customer Response Officer
BP Australia Pty Ltd
GPO Box 5222, Melbourne VIC 3001
Phone 1300 1300 27
www.bp.com.au