RACQ accuses some retailers of trying to bring back 'unfair' fuel cycle

The RACQ is sounding the alarm over a potential return to "unfair" fuel pricing cycles in southeast Queensland. Some service stations have already hiked petrol prices by as much as 30 cents in the past week. While the average unleaded price in Brisbane was 172.1 cents per litre on Monday, about 10% of stations in the region have pushed prices close to $2 per litre. This surge comes as the federal government's fuel excise discount was halved on July 1, with the full excise set to be reinstated next month, adding an estimated 32 cents per litre. "We think this is the fuel companies starting to reassert a price cycle. This is the behavior we see during the price hike phase," said Ian Jeffreys, RACQ's economic and affordability specialist. He explained that companies may raise prices at a few sites, hold them high, and then lower them if competitors don't follow. Jeffreys noted that southeast Queensland had experienced a six-to-eight-week price cycle until February, where prices would jump significantly before slowly discounting over several weeks. The "collapse" of this cycle, partly due to the closure of the Strait of Hormuz, led to a substantial drop in average retail margins, falling to 10.5 cents per litre in the June quarter from 21.2 cents in the March quarter – the lowest since 2019. Brisbane historically has the longest fuel price cycles in Australia, averaging six and a half weeks. Rowan Lee, CEO of the Australasian Convenience and Petroleum Marketers Association (ACAPMA), stated that the fuel price cycle is an indicator of market competition. He noted that stations increasing prices by 30 cents would likely see little business, encouraging consumers to use apps to find the cheapest options. Jeffreys suggested the attempt to reintroduce the cycle highlights the need for regulation.

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We think this is the fuel companies starting to reassert a price cycle. This is the behavior we see during the price hike phase.