Sniffing out petrol irregularities

From ABC, 20 Mar. 08
TUESDAY SHORTAGES SPARK PETROL PROBE


Inspectors from the New South Wales Department of Fair Trading have been asked to investigate reports some service stations avoid selling premium petrol on Tuesdays, when prices are generally at their lowest.
The State Government has been examining whether petrol companies are deliberately withholding stocks of premium unleaded fuel or if service stations are pretending to be out so the petrol can be sold at a higher price later in the week.

Fair Trading Minister Linda Burney says an online survey of nearly 400-consumers has found one quarter of service stations are not selling premium petrol on Tuesdays.
"The more stories we've heard, the more information that we've been getting," she said.
"It appears there is a much broader issue about the way in which oil companies actually release fuel and require their retailers to sell fuel."

Premier Morris Iemma says the evidence being gathered will be passed on to federal authorities.
"If a tanker driver's saying "Well, I remember doing a delivery there. There is petrol in that bowser" then we can check the invoices," he said
"We do have power to check the bowsers and we will do that because if we can get evidence, we can pass it on to the ACCC or the petrol commissioner who can prosecute."
Mr Iemma says the inspectors will also be checking the invoices of service stations to see whether they have fuel stocks.

"We're out there doing what we can to assemble information," he said.
"We've got anecdotal information. We can translate that to evidence by using our power of invoice - checking the invoices and unlocking the bowsers.
"[If] we can pin them, we will and we'll pass that on to those that can prosecute."

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Maybe we should have hot line to report irregularities?

By the way, where would you call if you bump into not working bowsers on certain days only?

Re: Sniffing out petrol irregularities.

Consumer Protection would be your best bet. I've seen BP's with ALL of their pumps 'out of service' at various times. It could be due to the tills being down, it could be due to an electrical problem, but they could have been unlucky and run out of all their different types of fuel at the same time, during peak times, midweek. Yeah, unlikely :

Sniffing and Petrol in the same sentence!!

Re: Sniffing out petrol irregularities.

Sprinter79 said:

Consumer Protection would be your best bet. I've seen BP's with ALL of their pumps 'out of service' at various times. It could be due to the tills being down, it could be due to an electrical problem, but they could have been unlucky and run out of all their different types of fuel at the same time, during peak times, midweek. Yeah, unlikely :

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A classic example of stupidity is one of the major oil companies trucking petrol from Burnie to Hobart, a distance of about 350km, because they messed up the shipping. It happens quite often and no doubt the consumer is paying somehow.

Re to whom to report any price anomalies or pumps out of action: I'd imagine Dept of Fair Trading would at least be a bit interested or if not, give you a phone number to call.

Service stations do not close down "cheaper" fuel grade pumps to force customers onto more expensive fuel grades to make more money because they don't. Margins on all fuel grades are roughly similar - the premium unleaded costs the retailer more than standard unleaded, that is why it sells for more.

l don't have a car.

gr8 post / thread Happy.

Heard em talking about it yesterday - think I heard it right
a, NSW are taking some initiative, inspectors checking etc
b. allegedly it's based on a WA scheme
c. the petrol is withheld when the price is cheap , to be sold when expensive (as per your article)
d. they can presumably claim average price was acceptable

BUT
e. the inspectors are only allowed to ask them for "paper trail" evidence of deliveries , i.e. if a tanker arrived Tuesday noon, they have no right to withhold petrol with SOLD OUT signs on Tues pm or Wednesday etc

f. when challenged as to why not give the inspectors the power to dip the tanks to check , answer was "no you can check the date on the delivery docket"

I thought to myself:-
g. Heck why don't the inspectors have right to check the tanks anyway ? - ridiculous
h. I'd love to get a video of tanker arriving, of then the SOLD OUT signs, and dob them in.
i. At least have the inspectors check the CCTV Closed circuit TV record of tanks arriving etc.

I mean, if they were serious about catching these oil companies out, they'd be doing better than relying on the date of an allegedly unaltered delivery docket from an allegedly incorruptable oil company driver (imo)

PS I can't believe they can look the Fair Trading people etc in the eye and say that the prices for all servos all happen to go up and down in phase - WITHOUT any "band conductor" in the background

the bludy band conductor should be banned imo

PS The other really good idea (maybe THIS was the one from WA) was to publish a week in advance each stations petrol price across the city.

That way people can plan ahead which station to refill at.

LOVE that idea !!

As to whether it will happen or not ? - mmm only when we get a govt prepared to take a few tough decisions.

I remember that for a while in WA, petrol was around 10c more expensive than the rest of Oz. Now's it's pretty much the same.

But this whole price fixing thing is way over our heads. It's people who own these multinational oil companies and OPEC. I'm not saying a consiracy, but we are just the masses right? What can a single person do? Should we have a national day where no one buys petrol? Can it be organised?
After the massive oil spike in 1979, prices dropped and we became addicted to oil again. And slowly the price has been rising. But we are still addicted to oil.
I have also heard from various people that if oil were to run out TODAY, we have the technology in place to continue on our ways. It would just take a few years to get it onto the market and be a little bit expensive, but it can be done.
Just my

Probably more than any other industry, the oil industry has always polarised people and recently this polarisation has led to more and more consumer dissatisfaction. Fuelled (sorry for the pun!) by the media, most consumers are now absolutely convinced that they are being ripped off by the oil majors, excessive profits are made and that price fixing happens on a regular basis.

However, there is no evidence that any of this happens - if in doubt just refer to any of the numerous ACCC enquiries. So why do these perceptions continue?

If we take a look at some common perceptions:

1. Price Fixing happens
The ACCC has looked into this and found time and again that price fixing does not occur. The only "evidence" people and media have is that retailers tend to sell at the same price, therefore they must collude. However, there is a very simple explanation for this - consumers will not buy fuel at a retail site not offering the lowest fuel price, even if the differential is very small. Prices are publicly available, and so any retailer wishing to keep his business alive must offer fuel at the lowest price in its local area. A natural floor happens to this reduction cycle when margins are only just enough to keep the business profitable. This is competition at its fiercest and the consumer benefits.

2. We're being ripped off on prices.
The recent ACCC report into petrol prices states that 86.5% of the price of a litre of fuel is crude oil costs + excise and GST margins. Only 3.6% of the price is retail margin. Therefore, at a price of $1.50 per litre, the retailer receives only 5.4 cents for every litre sold - note this is margin, not profit - and distribution and administration costs need to come from this. This is hardly rip-off territory.

3. Oil companies make excessive profits.
According to its annual report BP made a net profit in 2007 of USD17.3billion, and to most people this alone is enough to claim excessive profits. However, BP's capital employed - i.e. the amount of money it invests to get that profit - is around the USD140billion mark. This gives a return of about 12% per annum. If you had $140billion to invest I doubt you would think a return of 12% as excessive.

And finally....

I bought a litre of milk from my local supermarket today - $1.89. For that price you are paying for a cow, some grass, milking technology, bottling and transport. When you buy a litre of petrol you are buying: exploration – you have to find it first; mining – all of it is underground with most of it deep underneath miles of pesky seawater; refining – it comes out of the ground in a frustratingly difficult to use form; global transportation and storage – of a highly flammable liquid which requires vast safety resources; network – generally a large choice of convenient local, safe service stations where you can purchase the fuel. And the cost? Today, even as the recent oil price spikes are fed through, it was $1.50 per litre – and a significant proportion of this is excise and taxes.

So instead of bagging the oil companies continuously, perhaps we should be thanking them for managing to produce and deliver an important and dangerous material safely and for less than the cost of an equivalent volume of milk.

Go on – I dare you.

A very good friend of mine works in Canberra and it has to do with laws and cartels (That's about as much as l willl reveal).

He told me that the ACCC traced the phone's of the big oil companies. He said that within a 5 minute period, some 100's (around 300+) calls had gone out about the prices to service stations (which is normal). But, they also went between the other oil companies.
As the ACCC could only trace the calls (and not "bug" them) and telling another compnay what you are going to charge for something isn't illegal in Oz, nothing legally could be done about it.
It's obvious that they are fixing prices.
Why not use more public transport if your so "up in arms" about it.

DB008 said:

A very good friend of mine works in Canberra and it has to do with laws and cartels (That's about as much as l willl reveal).

He told me that the ACCC traced the phone's of the big oil companies. He said that within a 5 minute period, some 100's (around 300+) calls had gone out about the prices to service stations (which is normal). But, they also went between the other oil companies.
As the ACCC could only trace the calls (and not "bug" them) and telling another compnay what you are going to charge for something isn't illegal in Oz, nothing legally could be done about it.
It's obvious that they are fixing prices.
Why not use more public transport if your so "up in arms" about it.

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Dannyboy

Oil companies will need to talk to each other - they share facilities and indeed are joint owners of some facilities. They also have buy-sell arrangements with competitor-owned refineries in areas where they don't own a refinery. These are all out in the open and approved by the ACCC. This evidence of phone calls is absolutely no evidence of price-fixing.

Really, calling your competitor down the road and asking/telling what you are going to put your prices at doesn't have ANYTHING to do with price fixing?
Believe what you want. Everyone has their own opintion

DB008 said:

Really, calling your competitor down the road and asking/telling what you are going to put your prices at doesn't have ANYTHING to do with price fixing?
Believe what you want. Everyone has their own opintion

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You stated that the calls weren't bugged so how can you possibly know that they were calling for an illegal purpose (ie price fixing) as opposed to legitimate purposes?

gilbo said:

2. We're being ripped off on prices.
The recent ACCC report into petrol prices states that 86.5% of the price of a litre of fuel is crude oil costs + excise and GST margins. Only 3.6% of the price is retail margin. Therefore, at a price of $1.50 per litre, the retailer receives only 5.4 cents for every litre sold - note this is margin, not profit - and distribution and administration costs need to come from this. This is hardly rip-off territory.

3. Oil companies make excessive profits.
According to its annual report BP made a net profit in 2007 of USD17.3billion, and to most people this alone is enough to claim excessive profits. However, BP's capital employed - i.e. the amount of money it invests to get that profit - is around the USD140billion mark. This gives a return of about 12% per annum. If you had $140billion to invest I doubt you would think a return of 12% as excessive.

And finally....

I bought a litre of milk from my local supermarket today - $1.89. For that price you are paying for a cow, some grass, milking technology, bottling and transport. When you buy a litre of petrol you are buying: exploration – you have to find it first; mining – all of it is underground with most of it deep underneath miles of pesky seawater; refining – it comes out of the ground in a frustratingly difficult to use form; global transportation and storage – of a highly flammable liquid which requires vast safety resources; network – generally a large choice of convenient local, safe service stations where you can purchase the fuel. And the cost? Today, even as the recent oil price spikes are fed through, it was $1.50 per litre – and a significant proportion of this is excise and taxes.

So instead of bagging the oil companies continuously, perhaps we should be thanking them for managing to produce and deliver an important and dangerous material safely and for less than the cost of an equivalent volume of milk.

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Hard to argue with any of that.

If you want greed then try real estate. Buy a house. Do nothing with it beyond storage costs (insurance, mowing lawns etc). Sell if at 100% markup a couple of years later. Nothing wrong with it but it sure beats anything the oil companies have managed to do thus far.

Hey Smurf1976,
How many litres do u drink per week and how many litres does your car drink....


that was my last reply to this thread.

Well at first glance you'd say it was pretty naive to say that they don't collude if they are on the phone to each other - given that they are competitors ?? :eek3: .

Perhaps the authorities should insist that tanker companies are the hub for these conversations.

DB008 said:

Hey Smurf1976,
How many litres do u drink per week and how many litres does your car drink....


that was my last reply to this thread.

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Nothing personal but that one's straight out of the politicians' (and oil companies?) handbook. If you conclude that you aren't likely to win the debate then you just shut it down instead. Seen it done too many times to remember.

2020hindsight said:

Well at first glance you'd say it was pretty naive to say that they don't collude if they are on the phone to each other - given that they are competitors ?? :eek3: .

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I live straight opposite an oil terminal (across the river). The sign used to say Caltex although they have since removed the sign. Bottom line is Shell, Caltex, BP, Liberty, United etc in southern Tas ALL get their fuel out of those tanks, it all comes from the same Shell refinery and all arrives in the same boat.

Now, in that situation I can see a rather obvious need for communication.

If you live in Melbourne and buy BP petrol (for example) then the odds of that petrol actually coming from a BP refinery are incredibly low. Likewise you won't generally get actual Mobil petrol in Brisbane etc.

If you buy petrol in Brisbane then it's usually Caltex or BP no matter what is says on the pump.

In Sydney it's Shell or Caltex.

In Melbourne it's Shell or Mobil.

In Perth it's generally BP.

SA and Tas could be anything although Tas is usually Shell in practice.

Buy and hold shares in Caltex if you think oil refining and marketing is really that profitable.