Thursday, March 30, 2006
Petrol Price Hike 2
Listening to ABC Radio again David Cumming of the RACV stated that with an increase in oil barrell prices would see a petrol price rise of 10c a litre over time.
That morning I left for Echuca to sign up a couple more businesses to SmeB and noticed the Shell petrol station at the Lake had unleaded petrol at 119.9c per litre which was a low price. When I went past that night they had hiked their price to 128.9!!! The rest of the fuel outlets remained the same and did not rise.
Would you know it...Shell then dropped their price to 119.9 again.
What were they doing do you think?
Taking the advantage to raise their prices at the hint of a rise...and hoping the others would follow suit!!?
A lesson here again. Support the little fuel outlets and they will keep the big guys honest.
That morning I left for Echuca to sign up a couple more businesses to SmeB and noticed the Shell petrol station at the Lake had unleaded petrol at 119.9c per litre which was a low price. When I went past that night they had hiked their price to 128.9!!! The rest of the fuel outlets remained the same and did not rise.
Would you know it...Shell then dropped their price to 119.9 again.
What were they doing do you think?
Taking the advantage to raise their prices at the hint of a rise...and hoping the others would follow suit!!?
A lesson here again. Support the little fuel outlets and they will keep the big guys honest.
Tuesday, March 28, 2006
Toy Kingdom - Deni and Wendouree
Toy Kingdom in Deniliquin and Wendouree (Ballarat) have recently joined Scratch me Back.
Des and Michael both see the need to reward their loyal customers...what better way than to give them a big discount on their fuel.
Thursday, March 23, 2006
Fuel Prices Explained 3
From the RACV
RACV's guide to petrol
Since world oil prices soared to record highs, Australians have had to dig deep into their pockets at the petrol bowser. Motorists should be aware that roughly half the pump price is tax comprising an excise tax and a GST, thereby slugging motorists with an unfair tax on a tax.
After an unprecedented national campaign lobbying for fuel tax relief in 2000, the Federal Government agreed to review the way petrol is taxed and freeze the Federal excise at 37.7 cents a litre in Victoria. But costs are still high and, with GST on top of excise, if you wanted a $50 tank of petrol at $1 a litre you would be paying $23.40
What does it all mean? In the guide below we have tried to answer some of your questions.
How is petrol priced?
Why do prices fluctuate?
Your guide to petrol prices
How is fuel taxed?
How much are the high petrol prices costing Victorian motorists?
Are we any closer to fuel tax reform?
How is petrol priced?
The price of petrol in Australia is based on import parity, which means that even though the petrol you buy may well have been sourced from Australian oil, it is priced on the product price in Singapore plus freight, wharfage, insurance and converted into Australian dollars.
So the three main contributing factors that move the wholesale price of petrol up and down are the world price of oil, the petrol price in Singapore and the value of the Australian dollar.
By linking the price of petrol to the Singapore price the efficiency of that nations refineries is reflected in the Australian price which can be a good thing. However, increased demand in Asia can also push up our prices.
As Victoria operates under a legislated Terminal Gate Pricing (TGP) system the major oil companies are required to publicise their daily wholesale prices. These are provided on their web sites and by comparing the TGP with the retail price motorists can see when discounted fuel is being sold and should take advantage of the lower prices to fill up.
Why do petrol prices fluctuate?
In the petrol purchasing game not everyone is equal. For instance independent operators who purchase full tanker loads will buy at the Terminal Gate Price while franchised service stations will buy at a higher price.
Most motorists have no brand loyalty and buy purely on price. Large price boards at service stations allow motorists to shop around without leaving their vehicles. So price is all important and service stations that buy at the Terminal Gate Price tend to discount to attract customers.
The oil companies then have to price support their franchised operators so that they can compete. The discount war continues until the oil majors decide to stop price support and signal to the market that they have had enough and prices go up. With no discounts in the market both the oil companies and the service stations receive a very healthy margin.
There is a price cycle in the Melbourne metropolitan market, so RACV suggests motorists regularly monitor this site to see how prices move. If need be, change the day on which you fill your tank and take advantage of the discounts.
By shopping smarter you will save hundreds of dollars in fuel costs over the year.
How is fuel taxed?
There are two components to petrol taxes - petrol excise and GST.
Federal petrol excise was indexed between 1983 and 2001. Until March 2, 2001, it was increased twice yearly in August and February, in line with the Consumer Price Index. Indexation continually pushed the excise rate up. In 1983 it was just 6.2 cents a litre, and by February 2001 it had risen to 39.2 cents a litre in Victoria.
On March 2, 2001, the Federal Government cut the excise by 1.5 cents and abolished the twice yearly indexation. The excise now stands at 37.7 cents a litre in Victoria.
GST was introduced in July 2000 and is a flat tax calculated on the final pump price of fuel, after the 37.7 cent excise is added. Which means you are paying a tax on a tax.
Click here for to find out exactly how much tax you're paying at the pump, our charts will tell you.
How much are the high petrol prices costing Victorian motorists?
Victorians drive, on average, 15,000 kilometres a year, using around 1500 litres of petrol. If petrol prices hover between 90 cents and 99.9 cents a litre, the average person will spend between $1350 and $1500 a year in petrol.
The high cost of petrol tax is graphically outlined in the table below. This table shows the 37.7 cents per litre excise plus the 10 per cent GST that is paid on all unleaded, diesel and lead replacement petrol. Filling the average family car at today's price of around 90.0 cents per litre (cpl) of unleaded costs about $62.93 and puts about $32.11 into the Government. s pockets. Even a small runabout would cost about $36 to fill of which $18.35 goes to the Government.
Are we any closer to fuel tax reform?
The Federal Government has failed to deliver any meaningful fuel tax reform to ease thge burden on motorists. The release of its much anticipated fuel tax enquiry report delivered little. RACV did hold out hope this inquiry would actually achieve major changes and a fairer taxation regime, based on the introduction of a road user charge. Click here to read more about fuel tax enquiry.
RACV's guide to petrol
Since world oil prices soared to record highs, Australians have had to dig deep into their pockets at the petrol bowser. Motorists should be aware that roughly half the pump price is tax comprising an excise tax and a GST, thereby slugging motorists with an unfair tax on a tax.
After an unprecedented national campaign lobbying for fuel tax relief in 2000, the Federal Government agreed to review the way petrol is taxed and freeze the Federal excise at 37.7 cents a litre in Victoria. But costs are still high and, with GST on top of excise, if you wanted a $50 tank of petrol at $1 a litre you would be paying $23.40
What does it all mean? In the guide below we have tried to answer some of your questions.
How is petrol priced?
Why do prices fluctuate?
Your guide to petrol prices
How is fuel taxed?
How much are the high petrol prices costing Victorian motorists?
Are we any closer to fuel tax reform?
How is petrol priced?
The price of petrol in Australia is based on import parity, which means that even though the petrol you buy may well have been sourced from Australian oil, it is priced on the product price in Singapore plus freight, wharfage, insurance and converted into Australian dollars.
So the three main contributing factors that move the wholesale price of petrol up and down are the world price of oil, the petrol price in Singapore and the value of the Australian dollar.
By linking the price of petrol to the Singapore price the efficiency of that nations refineries is reflected in the Australian price which can be a good thing. However, increased demand in Asia can also push up our prices.
As Victoria operates under a legislated Terminal Gate Pricing (TGP) system the major oil companies are required to publicise their daily wholesale prices. These are provided on their web sites and by comparing the TGP with the retail price motorists can see when discounted fuel is being sold and should take advantage of the lower prices to fill up.
Why do petrol prices fluctuate?
In the petrol purchasing game not everyone is equal. For instance independent operators who purchase full tanker loads will buy at the Terminal Gate Price while franchised service stations will buy at a higher price.
Most motorists have no brand loyalty and buy purely on price. Large price boards at service stations allow motorists to shop around without leaving their vehicles. So price is all important and service stations that buy at the Terminal Gate Price tend to discount to attract customers.
The oil companies then have to price support their franchised operators so that they can compete. The discount war continues until the oil majors decide to stop price support and signal to the market that they have had enough and prices go up. With no discounts in the market both the oil companies and the service stations receive a very healthy margin.
There is a price cycle in the Melbourne metropolitan market, so RACV suggests motorists regularly monitor this site to see how prices move. If need be, change the day on which you fill your tank and take advantage of the discounts.
By shopping smarter you will save hundreds of dollars in fuel costs over the year.
How is fuel taxed?
There are two components to petrol taxes - petrol excise and GST.
Federal petrol excise was indexed between 1983 and 2001. Until March 2, 2001, it was increased twice yearly in August and February, in line with the Consumer Price Index. Indexation continually pushed the excise rate up. In 1983 it was just 6.2 cents a litre, and by February 2001 it had risen to 39.2 cents a litre in Victoria.
On March 2, 2001, the Federal Government cut the excise by 1.5 cents and abolished the twice yearly indexation. The excise now stands at 37.7 cents a litre in Victoria.
GST was introduced in July 2000 and is a flat tax calculated on the final pump price of fuel, after the 37.7 cent excise is added. Which means you are paying a tax on a tax.
Click here for to find out exactly how much tax you're paying at the pump, our charts will tell you.
How much are the high petrol prices costing Victorian motorists?
Victorians drive, on average, 15,000 kilometres a year, using around 1500 litres of petrol. If petrol prices hover between 90 cents and 99.9 cents a litre, the average person will spend between $1350 and $1500 a year in petrol.
The high cost of petrol tax is graphically outlined in the table below. This table shows the 37.7 cents per litre excise plus the 10 per cent GST that is paid on all unleaded, diesel and lead replacement petrol. Filling the average family car at today's price of around 90.0 cents per litre (cpl) of unleaded costs about $62.93 and puts about $32.11 into the Government. s pockets. Even a small runabout would cost about $36 to fill of which $18.35 goes to the Government.
Are we any closer to fuel tax reform?
The Federal Government has failed to deliver any meaningful fuel tax reform to ease thge burden on motorists. The release of its much anticipated fuel tax enquiry report delivered little. RACV did hold out hope this inquiry would actually achieve major changes and a fairer taxation regime, based on the introduction of a road user charge. Click here to read more about fuel tax enquiry.
Fuel Prices Explained 2
Article from AIP (Australian Institure of Petroleum)
PETROL PRICES
EXPLAINING PETROL PRICE CHANGES IN OUR CAPITAL CITIES
Price fluctuations at petrol pumps in our capital cities often frustrate motorists. But these fluctuations are a sign that service stations are competing with each other to attract you the motorist. This competition keeps Australia's petrol prices amongst the lowest in the world. This article explains the reasons behind petrol price fluctuations, as well as how motorists can use the discounting cycle to their advantage. Governments have a choice between restricting pump price movements that will result in higher prices, or continuing to allow prices to move freely which keeps prices low.
The Basic Building Blocks of the Price of Petrol
The best way to explain why petrol prices move up and down is to start with the basic building blocks of a litre of petrol and see who gets what. Petrol prices are made up of:
Product cost - 90% of the product cost is the price of purchasing the raw material, namely crude oil. Also included are the costs of refining crude into petrol (the yellow segment in the chart below).
Tax - excise and the GST (the red and purple parts respectively).
Distribution and retailing gross margin - this is the difference between the pump price and the cost (ie product cost plus tax). This is not profit, but the amount the distributors and retailers have to pay all of the costs from the refinery gate to the petrol bowser.
Daily Movements in the Pump Price: "Deciphering the Discount Cycle"
Competition drives the pump price up and down. At the top of the pricing cycle, when the distributor and retailer margin is usually about 9 to 10 cents a litre, one-by-one the individual services stations or brands start to discount their price by small amounts to attract more motorists.
Other service stations quickly match these prices in order to remain competitive. Highly visible petrol pricing boards allow both customers and competitors to observe price changes. In fact part of a service station attendants role is to keep an eye on competitors price boards. Once discounting starts or ends in one area, strong competition means it quickly spreads into other regions.
Prices are normally discounted for about a week (see example of Melbourne pump prices in chart above) and as the Distributors' and retailers' margin falls below 6 cents a litre, selling petrol begins to become unprofitable. Revenue shortfalls are partly offset by shop sales - in fact most service stations in our capital cities make up to 2/3 of their overall profit from selling shop items as opposed to petrol.
A motorist on the way home may notice the price is 6 to 9 cents higher than whey they drove to work and assume it was a smooth transition (and also be annoyed they did not fill up earlier). But in reality the pump price can vary significantly across the network and from service station to service station during the day.
The good news for motorists is that prices are normally discounted for six days or more, and then only go up once a week.
Why the Petrol Market is Different
The pricing cycle outlined above is evidence of the hyper-competitive nature of the Australian petroleum market. But why is this market so different and so volatile?
The reason is the petroleum market has different demand and supply characteristics to other markets that skew outcomes in favour of consumers. These industry-specific demand and supply characteristics include:
Consumers that will change brands for a fraction of a cent. Mesh this factor with highly visible price boards and the fact that customers are actually in their cars when "shopping", means it is very easy to compare prices and swap between brands to get the best price. The costs associated with swapping brands are very low or nil.
Most of the costs in selling petrol (such as rent, utilities and wages) are fixed, therefore when sales decrease, costs do not. Retailers are always competing against each other to get customers, and discounting is the most effective way of doing this. If competitors can drop their price by 0.5 cents a litre and you lose 20% of your customers with your costs remaining the same, you will match your competitors' price to ensure that does not happen. Price changes are quickly matched in the market place and the process continues. Once all the players in the market begin to discount to protect volume, prices quickly fall.
When petrol prices become unsustainably low (say a distributor and retailer margin of 2 to 4 cents a litre) some retailers will raise their price in order to see if they can bring some profitability back into the market. If no other players in the market "follow" the price up, they will reduce their prices back to the discounted level. Oil companies and other petroleum retailers may try and raise the price at one service station or across a network. This is a bit like a group of children playing around holding their breath at the bottom of a pool - once one can hold out no longer and decides to go up for air, the others usually follow.
This combination of factors leads to a very volatile, but highly competitive market and very cheap petrol prices. This is ultimately good for motorists.
Taking advantage of the discounting cycle
"Buy your petrol in Sydney and Brisbane on a Monday, but wait until Thursday in Melbourne and Adelaide."
The distributor and retailer margin varies between 4 and 10 cents a litre during most weeks. AIP encourages motorists to take advantage of the disounting cycle and buy at the bottom of the cycle when prices are low. In Sydney and Brisbane, more often than not this is on a Monday or Tuesday morning. The cycle tends to peak later in the week in Melbourne (see chart above) and Adelaide, normally on a Thursday or Friday afternoon.
But the safest bet is to fill up whenever you see a cheap price and not when your tank is empty. Therefore motorists can take full advantage of the discounting cycle and are less likely to be caught out if prices rise.
A choice for Governments
In 1998, the distributor and retailer margin averaged about 10 cents a litre. In 2001 this margin averaged about 4 cents a litre. This reflects how competitive and unprofitable the market has become.
If Governments wish to limit discounting and price fluctuations, they will have to set the price above this level to allow the industry to cover its costs. However, this is a poor outcome for consumers, as they will pay more for their petrol.
AIP believes a free and open market will provide the best possible outcomes for motorists.
As a survey by the RACV found, motorists are not happy with pricing fluctuations, but prefer them to higher prices:
Of the motorists surveyed in metropolitan Melbourne, 72% were dissatisfied with the current petrol pricing arrangements in Victoria. When asked if they would prefera regulated market which would remove these price fluctuations, 68% agreed. However, of the 68% who preferred a regulated and stable petrol price market, 51% would not support his system if it resulted in a higher average price for petrol, and 48% would not support the system if it removed the opportunity to purchase petrol when prices were low. (RACV submission to ACCC inquiry into price volatility)
This information is published by AIP with a view to helping people understand how and why the market works the way it does. The above article has been based on material sourced from the Shell Company of Australia web site: www.shell.com.au/petrolpricing.
All of this information, plus daily updates, information on city-country price differences and price breakdowns for over 100 suburbs and towns is available at AIP's web site http://www.aip.com.au/pricing/orima.htm.
PETROL PRICES
EXPLAINING PETROL PRICE CHANGES IN OUR CAPITAL CITIES
Price fluctuations at petrol pumps in our capital cities often frustrate motorists. But these fluctuations are a sign that service stations are competing with each other to attract you the motorist. This competition keeps Australia's petrol prices amongst the lowest in the world. This article explains the reasons behind petrol price fluctuations, as well as how motorists can use the discounting cycle to their advantage. Governments have a choice between restricting pump price movements that will result in higher prices, or continuing to allow prices to move freely which keeps prices low.
The Basic Building Blocks of the Price of Petrol
The best way to explain why petrol prices move up and down is to start with the basic building blocks of a litre of petrol and see who gets what. Petrol prices are made up of:
Product cost - 90% of the product cost is the price of purchasing the raw material, namely crude oil. Also included are the costs of refining crude into petrol (the yellow segment in the chart below).
Tax - excise and the GST (the red and purple parts respectively).
Distribution and retailing gross margin - this is the difference between the pump price and the cost (ie product cost plus tax). This is not profit, but the amount the distributors and retailers have to pay all of the costs from the refinery gate to the petrol bowser.
Daily Movements in the Pump Price: "Deciphering the Discount Cycle"
Competition drives the pump price up and down. At the top of the pricing cycle, when the distributor and retailer margin is usually about 9 to 10 cents a litre, one-by-one the individual services stations or brands start to discount their price by small amounts to attract more motorists.
Other service stations quickly match these prices in order to remain competitive. Highly visible petrol pricing boards allow both customers and competitors to observe price changes. In fact part of a service station attendants role is to keep an eye on competitors price boards. Once discounting starts or ends in one area, strong competition means it quickly spreads into other regions.
Prices are normally discounted for about a week (see example of Melbourne pump prices in chart above) and as the Distributors' and retailers' margin falls below 6 cents a litre, selling petrol begins to become unprofitable. Revenue shortfalls are partly offset by shop sales - in fact most service stations in our capital cities make up to 2/3 of their overall profit from selling shop items as opposed to petrol.
A motorist on the way home may notice the price is 6 to 9 cents higher than whey they drove to work and assume it was a smooth transition (and also be annoyed they did not fill up earlier). But in reality the pump price can vary significantly across the network and from service station to service station during the day.
The good news for motorists is that prices are normally discounted for six days or more, and then only go up once a week.
Why the Petrol Market is Different
The pricing cycle outlined above is evidence of the hyper-competitive nature of the Australian petroleum market. But why is this market so different and so volatile?
The reason is the petroleum market has different demand and supply characteristics to other markets that skew outcomes in favour of consumers. These industry-specific demand and supply characteristics include:
Consumers that will change brands for a fraction of a cent. Mesh this factor with highly visible price boards and the fact that customers are actually in their cars when "shopping", means it is very easy to compare prices and swap between brands to get the best price. The costs associated with swapping brands are very low or nil.
Most of the costs in selling petrol (such as rent, utilities and wages) are fixed, therefore when sales decrease, costs do not. Retailers are always competing against each other to get customers, and discounting is the most effective way of doing this. If competitors can drop their price by 0.5 cents a litre and you lose 20% of your customers with your costs remaining the same, you will match your competitors' price to ensure that does not happen. Price changes are quickly matched in the market place and the process continues. Once all the players in the market begin to discount to protect volume, prices quickly fall.
When petrol prices become unsustainably low (say a distributor and retailer margin of 2 to 4 cents a litre) some retailers will raise their price in order to see if they can bring some profitability back into the market. If no other players in the market "follow" the price up, they will reduce their prices back to the discounted level. Oil companies and other petroleum retailers may try and raise the price at one service station or across a network. This is a bit like a group of children playing around holding their breath at the bottom of a pool - once one can hold out no longer and decides to go up for air, the others usually follow.
This combination of factors leads to a very volatile, but highly competitive market and very cheap petrol prices. This is ultimately good for motorists.
Taking advantage of the discounting cycle
"Buy your petrol in Sydney and Brisbane on a Monday, but wait until Thursday in Melbourne and Adelaide."
The distributor and retailer margin varies between 4 and 10 cents a litre during most weeks. AIP encourages motorists to take advantage of the disounting cycle and buy at the bottom of the cycle when prices are low. In Sydney and Brisbane, more often than not this is on a Monday or Tuesday morning. The cycle tends to peak later in the week in Melbourne (see chart above) and Adelaide, normally on a Thursday or Friday afternoon.
But the safest bet is to fill up whenever you see a cheap price and not when your tank is empty. Therefore motorists can take full advantage of the discounting cycle and are less likely to be caught out if prices rise.
A choice for Governments
In 1998, the distributor and retailer margin averaged about 10 cents a litre. In 2001 this margin averaged about 4 cents a litre. This reflects how competitive and unprofitable the market has become.
If Governments wish to limit discounting and price fluctuations, they will have to set the price above this level to allow the industry to cover its costs. However, this is a poor outcome for consumers, as they will pay more for their petrol.
AIP believes a free and open market will provide the best possible outcomes for motorists.
As a survey by the RACV found, motorists are not happy with pricing fluctuations, but prefer them to higher prices:
Of the motorists surveyed in metropolitan Melbourne, 72% were dissatisfied with the current petrol pricing arrangements in Victoria. When asked if they would prefera regulated market which would remove these price fluctuations, 68% agreed. However, of the 68% who preferred a regulated and stable petrol price market, 51% would not support his system if it resulted in a higher average price for petrol, and 48% would not support the system if it removed the opportunity to purchase petrol when prices were low. (RACV submission to ACCC inquiry into price volatility)
This information is published by AIP with a view to helping people understand how and why the market works the way it does. The above article has been based on material sourced from the Shell Company of Australia web site: www.shell.com.au/petrolpricing.
All of this information, plus daily updates, information on city-country price differences and price breakdowns for over 100 suburbs and towns is available at AIP's web site http://www.aip.com.au/pricing/orima.htm.
Supermarket - Petrol and Loyalty Schemes
From Choice Magazine
Supermarket sales tactics
(Shop at locally owned SmeB businesses and save up to $1.00 off per litre)
Petrol and loyalty schemes
Petrol deals
Back in 1996, WOOLWORTHS was the first supermarket to announce plans to sell petrol, and also the first with a discount offer of four cents per litre for spending $30 or more at any of its stores.The success of its move into petrol is evidenced by its 11% share of national petrol sales, according to its 2003 annual report.
The move into selling petrol isn’t just a diversification into another product: think ‘one-stop’ shopping again. One retail industry expert said supermarkets see the move as an opportunity to increase ‘share of stomach’ sales by improving the “poor retail offer by traditional petrol retailers”. COLES told us that petrol and grocery retailing “are now converging”.
What they mean is that when you stop to fill up at their petrol stations, both COLES and WOOLWORTHS hope you’ll also make a few quick grocery ‘splurchases’ at the convenience store there. There’s a trap, of course: grocery items tend to cost more at these shops than in a normal supermarket.
But how much are you really saving with the petrol discounts anyway? In August last year, Money Magazine looked into petrol offers and reported that the average motorist uses 32 L of petrol a week (based on Australian Bureau of Statistics data).
The magazine calculated that the average motorist would save $1.30 per week with the discounts — an amount that could easily disappear on one impulse buy.
Make sure the petrol offer works in your favour:
Get a feel for prices at supermarket petrol outlets, try to resist impulse buys there
Don’t drive out of your way to collect the 4 ¢/L discount.
When we asked subscribers about fuel discounts, 90% said they wouldn’t drive more than 5 km to collect a 5 ¢/L discount — a wise approach, given that the extra fuel used would eat into the saving.
Loyalty schemes
All loyalty programs are designed to encourage you to buy more in a particular store — and we must fall for them, or the companies wouldn’t spend money to run them. COLES says that cost-effective — read profitable — loyalty programs require a 1–2% investment of sale profits.
We'll be taking a close look at the value of loyalty schemes in an upcoming edition of our new magazine CHOICE Money and Rights but here’s a brief rundown of how the major supermarkets reward loyal shoppers.
COLES:
Recently revamped its ‘Fly Buys’ reward scheme: you now get two points for every $5 spent.
Also introduced ‘The Source’ COLES MYER MasterCard, which attracts Fly Buys points too (one point per $1 spent). So if you pay for your COLES MYER eligible purchases with The Source card and flash your Fly Buys card, you get seven points for every $5 spent.
Rewards start from 10,000 points, and to earn a $100 COLES MYER voucher you need 13,000 points, for which you need to spend approximately $9000. That’s a lot of spending at COLES or associated shops.
WOOLWORTHS:
Called ‘Ezy Rewards’, the program allows shoppers to accrue rewards points when using WOOLWORTHS Ezy Banking products (Commonwealth Bank-operated savings or credit accounts).
Customers get at least one point for every $1 spent and need 3600 to earn a $25 rewards voucher — an even more expensive way to get ‘free’ goods.
Fuel Prices Explained 1
There is a great deal of emotion and frustration regarding high fuel prices and the perception by the consumer that fuel outlets are manipulating the system.
The next few posts will help explain how fuel prices are derived and what you can do to get the best deal.
The first article is from Choice Magazine.
Petrol prices
Consumers are seeing large and rapid changes in crude oil prices, and wondering what it means at the petrol pump.
Petrol prices in Australia are set by the oil companies in line with the price of the refined product coming out of Singapore. The Singapore price was agreed on many years ago as a best indicator for refined petroleum products in our region.
There’s no direct link between the petrol price you pay and the cost of the crude oil used to make it, only this indirect link via Singapore. Consequently if Singapore prices are ‘up’ due to supply and demand in the region, you’ll pay more for your petrol — and the oil companies may make extra profits — even if crude oil is ‘down’. And the opposite applies, of course.
However, if you plot a typical crude oil price (adjusted into the Australian dollars we pay for it) against the petrol price without tax (tax is almost half of the price we pay), you’ll see that the local petrol price, on average, relates pretty well to the crude oil cost.
When the crude oil price goes down from US$50 to US$40 per barrel (159 L) that suggests the petrol price should go down 8 cents/L. And in due course it probably will. So do prices go up fast but down slowly? It always feels like that but it isn’t really the case.
Most of us probably tend to notice suddenly that the petrol price is going up sharply, without having noticed the oil price going up before that. Then with this heightened sensitivity we anxiously watch the crude oil price on TV every night, so that when it does start to decline we’re aware of the delay before the petrol price follows.
This is made even more confusing by the daily fluctuations in petrol prices and the disparities across cities and between cities and regions. You can really only compare average prices — the average for a week or even a month — which makes the relationship between petrol and oil all the more uncertain.
The overall margin — the value that wholesalers and retailers together take out of the price — is around 8 cents/L. If they get an extra margin of 0.5 or 1 cent/L from time to time it’s a big benefit to them. But it’s very hard to observe the market so closely that we can see whether at any particular time they’ve managed to stretch that margin out, or had it shrink on them due to some intense competition.
See also this link - Are consumers getting Screwed on Petrol?
The next few posts will help explain how fuel prices are derived and what you can do to get the best deal.
The first article is from Choice Magazine.
Petrol prices
Consumers are seeing large and rapid changes in crude oil prices, and wondering what it means at the petrol pump.
Petrol prices in Australia are set by the oil companies in line with the price of the refined product coming out of Singapore. The Singapore price was agreed on many years ago as a best indicator for refined petroleum products in our region.
There’s no direct link between the petrol price you pay and the cost of the crude oil used to make it, only this indirect link via Singapore. Consequently if Singapore prices are ‘up’ due to supply and demand in the region, you’ll pay more for your petrol — and the oil companies may make extra profits — even if crude oil is ‘down’. And the opposite applies, of course.
However, if you plot a typical crude oil price (adjusted into the Australian dollars we pay for it) against the petrol price without tax (tax is almost half of the price we pay), you’ll see that the local petrol price, on average, relates pretty well to the crude oil cost.
When the crude oil price goes down from US$50 to US$40 per barrel (159 L) that suggests the petrol price should go down 8 cents/L. And in due course it probably will. So do prices go up fast but down slowly? It always feels like that but it isn’t really the case.
Most of us probably tend to notice suddenly that the petrol price is going up sharply, without having noticed the oil price going up before that. Then with this heightened sensitivity we anxiously watch the crude oil price on TV every night, so that when it does start to decline we’re aware of the delay before the petrol price follows.
This is made even more confusing by the daily fluctuations in petrol prices and the disparities across cities and between cities and regions. You can really only compare average prices — the average for a week or even a month — which makes the relationship between petrol and oil all the more uncertain.
The overall margin — the value that wholesalers and retailers together take out of the price — is around 8 cents/L. If they get an extra margin of 0.5 or 1 cent/L from time to time it’s a big benefit to them. But it’s very hard to observe the market so closely that we can see whether at any particular time they’ve managed to stretch that margin out, or had it shrink on them due to some intense competition.
See also this link - Are consumers getting Screwed on Petrol?
Petrol Price Hike
Just before the opening of the Commonwealth Games and the start of the school holidays petrol prices took a price hike of up to 10c per litre.
Many people rang into ABC regional radio complaining in many towns.
In Shepparton the main Shell petrol station at the Victoria Lake was around 10c higher than the independent Shell on Melbourne Rd. A few others in town followed suit.
The big guys were getting greedy.
Both Scratch me Back fuel outlets remained much cheaper.
It wasn't long before the prices returned to what they were.
It is crucial that the small petrol stations survive to keep the big guys honest.
Scratch me Back allows the little guys to get extra trade and lessens the need to raise fuel prices when the big guys do.
Wednesday, March 22, 2006
Toy Kingdom first business in Deni
Des Francis, who is the owner of Toy Kingdom in Deniliquin, is the first business to sign up. Together with Mobil North Service Station they will offer huge discounts to the locals.
This enables the little businesses and the little fuel outlet to compete against the big guys.
Thursday, March 16, 2006
Soon you can Do it in Deni
Mobil North Service Station signed up today in Deniliquin.
Deni residents will soon be able to get huge discounts on their fuel by supporting local small businesses.
Wednesday, March 15, 2006
JUST ASK - if you want your back scratched!
Most businesses would like the customer to ask for Scratch me Back cards.
It shows them that the customer is motivated to shop there and get a card. It is a way that they can measure that SmeB is helping their business.
It's like wanting your back scratched...sometimes you just need to ASK!
It shows them that the customer is motivated to shop there and get a card. It is a way that they can measure that SmeB is helping their business.
It's like wanting your back scratched...sometimes you just need to ASK!
Typical Scratch me Back "Just Ask" mobile. Spend over $50 here.
Just Ask to get your card/s.
Friday, March 10, 2006
Classic Rock joins SmeB
As a keen member of Echuca Moama Tourism Gino Ciarlo believed SmeB would be great for his radio station - Classic Rock 102.5 FM . This will cover SmeB in Echuca and Deniliquin areas.
A contra deal has been established whereby Classic Rock and Scratch me Back will cross-promote. Commencing early April.
The Port of Echuca has also joined with SmeB to offer fuel discounts to tourists who can take advantage of the huge fuel discounts available.
Broome Radio Stations keen on SmeB
Andrew Metcalf was in Echuca as commentator for the Southern 80 Ski Racing and received a Scratch me Back card. As a manager of two radio stations he was so impressed with the concept that he contacted Geoff for more details.
Discussions are progressing with the intention of launching SmeB in Broome as a joint radio promotion with SPIRIT 102.9 in Broome then maybe further afield.
Discussions are progressing with the intention of launching SmeB in Broome as a joint radio promotion with SPIRIT 102.9 in Broome then maybe further afield.
Wednesday, March 01, 2006
Shoppers Save Money in Echuca
Shoppers are still amazed that by adding Scratch me Back cards together they can make huge savings on fuel.
One shopper in Echuca received a $1 off per litre card from Hare St Butchery and a couple of others to get a whopping $1.20 off per litre. A saving of $36!
Shoppers who get the high value cards then spread the word. Valuable word of mouth advertising for any business.
Riverine Herald article - 27th February 2006
Echuca Premier - Advert Feb 06
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