The consumer watchdog has found Australia's low petrol prices are also incredibly profitable for oil companies

Photo by Scott Barbour/Getty Images

The Australian Competition and Consumer Commission’s (ACCC) regular look at the nation’s average petrol prices has found that in 2015–16 they were at their lowest levels since 2002.

That’s great news for motorists, but it turns out the oil companies have been enjoying them too, pushing gross retail margins to the highest level since monitoring began 14 years ago.

The consumer watchdog says their analysis shows that the industry is pocketing a substantial proportion of the drop in international crude oil and refined petrol prices rather than passing it on to motorists.

The average price for petrol in Australia’s five largest cities (Sydney, Melbourne, Brisbane, Adelaide and Perth) in 2015–16 was 121.7 cents per litre (cpl). That’s the lowest annual average since 2001–02 in real terms (adjusted for inflation).

But meanwhile, gross retail margins – the difference between retail and published wholesale prices – in the five largest cities increased by 1.2 cpl on the previous quarter, and averaged 11.2 cpl in 2015–16, the highest level since monitoring began in 2002.

The ACCC’s quarterly report found prices in the five largest cities in the June quarter 2016 were 118.0 cpl, an increase of 7.0 cpl from the previous quarter.

Here’s the chart the ACCC released showing prices and margins:

The figures above show the components of Australian petrol prices in the five largest cities in 2014–15 and 2015–16. In 2015–16 the relative contribution of ‘other costs and margins’ (which includes both retail and wholesale costs and margins) increased to 17% of the average retail petrol price. While the international price of refined petrol (Mogas 95) remained the largest contributor to the average bowser price, its relative contribution decreased to 42% in 2015–16.

ACCC chairman Rod Sims said his organisation was concerned about the petroleum industry’s high gross retail margins.

“Bowser prices for motorists last year were the lowest they’ve been on average for 14 years, but this report suggests that in order for there to be more competitive pressure on retailers, consumers need to shop around and reward those offering the best-priced fuel,” he said.

Sims encouraged people to use apps such as MotorMouth, which offer near real‑time petrol prices thanks to a deal struck by the ACCC in December 2015.

“Some motorists have been quick to take advantage of these petrol price apps and are already using them to ensure they are getting the best price when they fill up. This improved price transparency puts pressure on retailers to offer competitive prices or risk customers driving to a petrol station that does,” he said.

Heavy discounting in recent weeks has seen petrol prices swing as much as 30%, from under $1 lt to $1.30 for E10.

Sims said increased price transparency was key to increasing competition.

“We know that price competition works to bring down retail margins. We have seen this in Launceston, where prices and margins have been lower following discount schemes and better price transparency,” he said.

The ACCC’s analysis found both crude oil prices and international refined petrol prices were at their lowest levels in more than a decade in 2015–16. The decline in crude oil prices from mid-2014 to early-2016 was influenced by weaker international economic conditions, and global oil production significantly exceeding consumption.

Diesel and LPG prices were also at relatively low levels in 2015–16. The annual average retail diesel price in the five largest cities in 2015–16 was 121.0 cpl, which was 19.4 cpl lower than 2014–15, and the lowest annual average price since 1998–99 in real terms.

The annual average retail LPG price in the five largest cities in 2015–16 was 64.2 cpl. This was 6.5 cpl lower than 2014–15, and the lowest annual average price since 2004–05 in real terms.

NOW WATCH: Briefing videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.