Do we need anymore proof on petrol prices?

Thought there was nothing in petrol??

http://www.news.com.au/business/story/0,27...421-462,00.html

A PETROL war has broken out among rival supermarket chains, with a 40c a litre discount on offer for big grocery buys.

It was revealed this morning that supermarket giant Coles would offer the largest petrol discount of 40c a litre for shoppers who spend more than $300 on groceries.

Under the scheme, shoppers spending more than $100 get 10c a litre off, those spending more than $200 save 25c a litre, and customers spending more than $300 get a 40c a litre discount, the Herald Sun reports.

Victorian rival Safeway has since announced that it would match the discounts from 12pm (AEST) today.

Safeway spokesman Benedict Brook flagged further snap specials in the future as the arch rivals fought for customers.

"Price cuts of this magnitude are not sustainable for long periods of time, but with people under the pump with the economy the way it is more one offs are likely in the future,'" Mr Brook said.
But the schemes have already attracted criticism from Canberra and a major motoring group.

Independent Senator Nick Xenophon blasted the offers as proof of "obscene" power in the petrol market.

"If they can offer discounts at this level, surely this is proof that the big oil companies and the supermarket chains are overcharging massively when they aren’t offering discounts," Senator Xenophon said.

"This is further proof that a handful of companies have Australian motorists over a barrel."

Queensland motoring body RACQ told the Courier-Mail that the discounts were only worthwhile if the family grocery spend was in the hundreds of dollars.

"Bear in mind that spending $300 on groceries to gain a 40 cents a litre fuel discount would save you $16 on a 40-litre top-up," RACQ spokesman Gary Fites said.

"If your normal grocery bill is less than $300, buying unnecessary items to reach that limit means you would almost certainly come off worse in the deal."

Mr Xenophon called for the Australian Competition and Consumer Association to investigate the price stunt.

The state and federal governments make more out of fuel than the petrol stations do.

This is a highly unusual and unprecedented offer.

It sounds like one of the major players contracted to buy a certain amount of wholesale fuel and now needs to dump it before a price rise.

Expiring futures contracts?

Krusty the Klown said:

The state and federal governments make more out of fuel than the petrol stations do.

This is a highly unusual and unprecedented offer.

It sounds like one of the major players contracted to buy a certain amount of wholesale fuel and now needs to dump it before a price rise.

Expiring futures contracts?

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Pretty unlikely.
I would guess that this offer is purely to drive customers into the Coles stores and give them exposure to the new product / branding offers.
It is for a limited time only and when compared to paid TV and catalogue advertising it's cheap and effective. Already had huge pay back from the free TV and newspaper coverage.
Not much different to the old loss leader strategy thats been used for years, just using petrol instead of Coke or biscuits.

Bandito's

These guys always annoy me especially come Wednesday night in Canberra when the price suddenly jumps 10-20 c a liter to match payday and the oncoming weekend.

Besides shopper dockets are a misdirection. No company gives away money or cuts profits if can avoid too. Don't you think that maybe the inflated grocery cost in Australia may just be a little connected to the petrol stations take over frenzy and following discount coupons?

Anyway I prefer Aldi's but I hang around coles/woolies carpark's waiting for old ladies to drop their receipts on the ground. Win Win. I get a real discount (not a phantom) and the environment suffers from less litter.

Spend $300
Get $24 discount on a tank of petrol.
Discount on $300 of Goods less than 8%
Given a small mark up on the petrol.

There is a simple solution.
Instead of Fly buys have a Fuel buys network system that EVERY business can tap into and every service station can be a part of.

Level the playing field.

tech/a said:

Spend $300
Get $24 discount on a tank of petrol.
Discount on $300 of Goods less than 8%
Given a small mark up on the petrol.

There is a simple solution.
Instead of Fly buys have a Fuel buys network system that EVERY business can tap into and every service station can be a part of.

Level the playing field.

Click to expand...

So, how does Coles and Woolworths maintain/extend their duopoly in that scheme? That creates competition *shudder*

(In case you missed the sarcasm, why would either of the big two help out their competitors? If the government created one to break up the duopoly, then I'm sure both of them would simply just say. Not interested anymore, and not be a part of the govt scheme.)

tech/a said:

Spend $300
Get $24 discount on a tank of petrol.
Discount on $300 of Goods less than 8%
Given a small mark up on the petrol.

There is a simple solution.
Instead of Fly buys have a Fuel buys network system that EVERY business can tap into and every service station can be a part of.

Level the playing field.

Click to expand...

Competing with the competitors.
Nothing more.

This 3 day offer In no way suggests that fuel is over priced, It's simply a good marketing idea.

40c off / litre on the average tank of fuel = $25.

To get this $25 discount you have to spend $300 at a woolworths store, the profit margin on the $300 could easily cover a $25 discount in it's own right,

However the smart people at woolworths know that a promise of 40c per litre sounds better than a simply 8% discount, and they also have the added benfit of making you go to a second retail outlet where you can be tempted to purchase other impulse items such as ciggies, drinks, paper, coffee etc etc.

And as any retailer would tell you, it is better have a customer buy the first item at full price and give a discount off a second item, rather than a flat discount on the first item.

All in all they are giving you a $25 discount off a purchase of $370 (grocerices + fuel), plus they are selling more impulse items at the second location and increasing the customer spend at the first location.

Nick Xenophon and the ACCC are a joke. Lower prices they want an investigation. Higher prices they want an investigation. Shouldn't they be happy with lower prices and the competition between Coles and Woolworths? Anti-trust/anti competition laws are just an excuse for government to exercise central planning of markets for political purposes (i.e. votes).

I would not expect the ACCC to do anything. I sent them an email once about a company exploiting their monopolistic situation and they replied that it all boils down to supply and demand! They can charge what they want. And yes one of the issues was exuberant fuel prices.

overit said:

it all boils down to supply and demand! They can charge what they want. And yes one of the issues was exuberant fuel prices.

Click to expand...

You nailed it, in a capitalist market economy every thing is supply and demand.

The capitalists are free to set what ever prices they want and if they set prices with to much fat in them eventually competion will arrive in some form or another to get a piece of the action.

In my Business I sell item's that cost me less than $2 to make for anywhere up to $45, on most of my product lines the profit margin is over 80% ( not an 80% markup, but a full 80% gross profit after gst), why can I do this, because no one else in my area does offer the products I do,

When it comes to prices consumers should be ignored they really have no idea, a couple of weeks back I had a lady argue that I couldn't charge her $40 because in her opinion it only cost me $1 to make (she was actually spot on) So I asked her " If this did cost me $1 to make, what should I be selling it for" she replied "$1.50", lucky I don't let her set the prices.

If she set the prices I would Have to sell,

80 / hour just to cover staff wages + 300 / day to cover the rent of the shop and thats before I calculate the mutitude of other costs involved in running a business, and before a have a single cent returned in profit.