Footnotes

Chapter 2 - Background and conduct of the inquiry

[1]        Prime Minister and Assistant Treasurer; joint press release, 15 April 2008 (some versions misdated 15 March).

[2]        The latter bill amends the Trade Practices Act 1974 so that it covers Fuelwatch.

 

Chapter 3 - The Economics of Fuelwatch

[1]        Prices in financial markets, such as share prices and exchange rates are also volatile, but information and transactions costs are much lower in these markets so that prices quoted from different brokers will vary very little in contrast to the large differences in prices between service stations.

[2]        This risk could be reduced by colluding with the other sellers to agree to all increase their prices, but this is illegal.

[3]        Mr Graeme Samuel, ACCC, Proof Committee Hansard, 7 August 2008, p.12.

[4]        National Roads and Motorists Association, Submission 23, p. 2.

[5]        Professor Wang, Submission 27, p. 6.

[6]        ACCC (2007, p. 13); Senate Standing Committee on Economics (2006, pp 5-7, 22).

[7]        Service Stations Association, Submission 7, p. 2.

[8]        Among those advocating more information for consumers are the Royal Automobile Club of Tasmania, Proof Committee Hansard, 11 August 2008, pp 11-2; Royal Automobile Club of Victoria, Proof Committee Hansard, 7 August 2008, p. 48; National Roads and Motorists Association, Proof Committee Hansard, 1 August 2008, p. 16; Choice, Proof Committee Hansard, 7 August 2008, p. 61; and Royal Automobile Club of Queensland, Proof Committee Hansard, 17 July 2008, p. 11;

[9]        Informed Sources, Submission 22a, p.9.

[10]      Mr Gordon Renouf, Choice, Proof Committee Hansard, 7 August 2008, p. 61.

[11]      The committee heard that fuel price information is posted on websites by motoring associations in New South Wales, Victoria, Queensland, South Australia and Tasmania. Of course this is a cost the motoring organisation does not incur in Western Australia, where a Fuelwatch scheme already operates. Other websites with fuel prices include one operated by a radio station in the Northern Territory; Mr Robert Bradley, Automobile Association of the Northern Territory, Proof Committee Hansard, 7 August 2008, p. 66.

[12]      Mr Stephen Marshall, WIN Television, Proof Committee Hansard, 18 July 2008, p. 17.

[13]      Mr Stephen Marshall, WIN Television, Proof Committee Hansard, 18 July 2008, p. 17.

[14]      Mr Vince Taskunas, Royal Automobile Club of Tasmania, Proof Committee Hansard, 11 August 2008, p. 9.

[15]      Mr Vince Taskunas, Royal Automobile Club of Tasmania, Proof Committee Hansard, 11 August 2008, p. 9.

[16]      Mr Alan Evans, National Roads and Motorists Association, Proof Committee Hansard, 1 August 2008, p. 16.

[17]      Mr David Sullivan, RACV, phone call to Secretariat.

[18]      Explanatory Memorandum, p. 7; .Budget Paper no. 2, p. 291 and Estimates Hansard, 5 June 2008, pp 42-3. This estimate of operating costs seems plausible given that the WA government currently spends $700 000 a year operating its FuelWatch system.

[19]      The Australian Institute of Petroleum claims that compliance costs for service stations will average $4,000 a year but provide no explanation for this estimate; Submission 2a.

[20]      The cycles have been around a long time but with gradual changes. A South Australian select committee (2001, p. 33) found 'a pattern of high prices around Tuesday/Wednesday chasing down to low prices around Sunday/Monday'. The term 'magic Tuesday' was coined by Mr Aivars Blums, Motor Trades Association of Queensland, Proof Committee Hansard, 17 July 2008, p. 1.

[21]      ACCC (2007, pp 14 and 136).

[22]      ACCC (2007, p. 14).

[23]      ACCC (2007, p. 137).

[24]      The opinion poll commissioned by the ACCC in November 2007 showed that 70 per cent of motorists usually or always try to buy petrol when it is cheapest while 28 per cent just buy when they need it. The latter group includes many of the 8 per cent of customers for whom someone else (presumably mostly employers) pays for the petrol. An opinion poll conducted for the Australian Automobile Association showed that 49 per cent of motorists try to buy when petrol is cheapest, up from 41 per cent in 2005. ACCC (2007, pp 31-2).

[25]      An opinion poll conducted for the ACCC in November 2007 showed 74 per cent of motorists correctly nominate Tuesday as the best day to buy petrol but only 47 per cent buy petrol on Tuesdays. Only 20 per cent of petrol is sold on Tuesdays; ACCC (2007, pp 177-9, 290, 293).

[26]      ACCC (2007, p. 31). 68 per cent of motorists were 'extremely concerned' about this, so presumably an even larger proportion believe it happens. See also Senate Standing Committee on Economics (2006, pp 26-7).

[27]      While the variation during the weekly cycle is typically 5-10 cents per litre, the average customer estimates it at 13 cents.

[28]      ACCC (2007, pp 162-3). An exception may be Norway, which has similar cycles; Informed Sources, Submission 22, p. 26.

[29]      ACCC (2007, p. 16). On their website, the ACCC describe the reasons for them as 'complex' and include 'possible anti-competitive practices'.

[30]      ACCC (2007, pp 164, 350-2). The theory was first developed in Edgeworth (1925).

[31]      Informed Sources, Submission 22, pp 24-6; and Professor Wang, Submission 27.

[32]      It may go back to when workers were predominantly paid on a Friday and would fill the car up while out shopping on a Saturday morning; Neumann Petroleum, cited in ACCC (2007, p. 174). A similar explanation is put by Informed Sources, Submission 22, p. 25.

[33]      Cited in ACCC (2007, p. 177).

[34]      Those on a 'date' , wanting to go out with a large group of friends or not wanting a late night when working the next day may be willing to pay the higher price on a Saturday while individuals on a tight budget may prefer to buy the cheaper ticket on a Tuesday.

[35]      Australian Institute of Petroleum, Submission 2a, p. 18.

[36]      44% of motorists nationwide are 'extremely concerned' about this (the national average being pulled down by Perth motorists where intra-day variation is prohibited) and 83% would prefer the same price apply all day. 63% would prefer a uniform price all day even if this meant a less predictable weekly cycle. Given a choice 33% of motorists would prefer no intraday variation and 48% would prefer a lower average price. ACCC (2007, pp 280-1, 295–6).

[37]      Cited by the Hon Chris Bowen, House Hansard, 29 May 2008, p. 3870.

 

Chapter 4 - FuelWatch in Western Australia

[1]        WA Department of Consumer and Employment Protection, Submission 5, p. 5.

[2]        Ms Anne Driscoll, WA Department of Consumer and Employment Protection, Proof Committee Hansard, 16 July 2008, p. 2.

[3]        Mr David Moir, Royal Automobile Club of Western Australia, Proof Committee Hansard, 16 July 2008, p. 24.

[4]        WA Department of Consumer and Employment Protection, Proof Committee Hansard, 16 July 2008, p. 5.

[5]        Ms Anne Driscoll, WA Department of Consumer and Employment Protection, Proof Committee Hansard, 16 July 2008, pp 2 and 5.

[6]        Mr Aaron Rayner, WA Department of Consumer and Employment Protection, Proof Committee Hansard, 16 July 2008, p. 3.

[7]        Mr David Moir, Royal Automobile Club of Western Australia, Proof Committee Hansard, 16 July 2008, p. 27.

[8]        WA Department of Consumer and Employment Protection, Submission 5a.

[9]        Concerned consumers, cited in WA Department of Consumer and Employment Protection, Submission 5a. The Department notes that 'no negative comments about FuelWatch were received by Consumer Protection'; Submission 5a, p. 3.

[10]      Ms A Driscoll, WA Department of Consumer and Employment Protection, Proof Committee Hansard, 16 July 2008, p. 3. The comparison was done as at June 2008.

[11]      ACCC (2007, p. 50).

[12]      ACCC (2007, p. 83). The WA limit is 0.1 per cent, compared to 1 per cent in the rest of Australia and 15 per cent in Europe (in other respects the Australian and European requirements are virtually the same as those in Europe). Informed Sources suggest this quality premium translates into 2 cents a litre; Submission 22, p. 12.

[13]      Smaller subsidies were removed in Tasmania and Victoria during 2007. The NT government has 1.1 cents a litre subsidy. NSW and SA have some subsidies in rural areas but not in Sydney or Adelaide. ACCC (2007, pp 88-90).

[14]      Woolworths estimates the difference in shipping costs is 1.3 cents a litre; Submission 28a, p. 1. Senator Abetz puts it at 0.7 cents a litre; Proof Committee Hansard, 16 July 2008, p. 7.

[15]      The comparable figures were 3.7 cents in Adelaide, 4.7 cents in Sydney, 4.9 cents in Melbourne and 5.1 cents in Brisbane; ACCC (2001, p. 141).

[16]      Senator Abetz commented 'as I understand it, Caltex has asserted publicly that it makes its biggest margins in Western Australia' and he said that another oil company made the same claim privately; Proof Committee Hansard, 16 July 2008, pp 8 and 26.

[17]      Mr Michael Ridley-Smith, Caltex, Proof Committee Hansard, 1 August 2008, p. 25.

[18]      Both cited in ACCC (2007, p. 246).

[19]      As the Royal Automobile Club of Victoria's David Cumming put it, 'they are different over there'; Proof Committee Hansard, 7 August 2008, p. 53.

[20]      Professor Don Harding, Submission 4a, p.19.

[21]      Senator Abetz, Proof Committee Hansard, 16 July 2008, p. 9.

[22]      ACCC (2007, pp 247, 375-7); ACCC (2008); and Dr King, ACCC, Estimates Hansard, 5 June 2008, p. 51.

[23]      Mr J Dimasi, ACCC, Estimates Hansard, 5 June 2008, pp 19 and 40.

[24]      This criticism was made by Professor Harding (Submission 4a)

[25]      Estimates Hansard, 4 June 2008, p. 85.

[26]      Submission 1, p. 2.

[27]      Serially correlated errors might be introduced by interpolating 13 observations from quarterly CPIs given that fuel prices do not move smoothly.

[28]      Dr Stephen King, ACCC, Proof Committee Hansard, 7 August 2008, p. 6.

[29]      Submission 17.

[30]      Henry Ergas, 'Kevin 24-7 or 7-11', The Australian, 3 June 2008.

[31]      Professor Wang Zhongming, Submission 27, p. 10.

[32]      Informed Sources, Submission 22a, p. 7.

[33]      Mr Graeme Samuel, ACCC, Proof Committee Hansard, 7 August 2008, p.7. This interpretation is given some support by the comments by Professor Harding who said after his first paper attacking Fuelwatch came out, 'Informed Sources gave the data to me. They said they were impressed with my work. It was not available to other academics'; Professor Don Harding, Proof Committee Hansard, 7 August 2008, p. 24.

[34]      Dr King, ACCC, Estimates Hansard, 5 June 2008, p. 39.

[35]      Submission 15.

[36]      Dr Stephen King, ACCC, Proof Committee Hansard, 7 August 2008, p.7.

[37]      Professor Wang Zhongming, Submission 27, p. 10.

 

Chapter 5 - Fuelwatch and independent operators

[1]        Mr Topham, Caltex, Proof Committee Hansard, 1 August 2008, p. 27.

[2]        The four oil companies (Shell, Caltex, Mobil and BP) and the two supermarket chains (Coles and Woolworths) between them account for 100 per cent of refining, over 90 per cent of importing, over 95 per cent of wholesaling, and over 90 per cent of retailing; ACCC (2007, pp 6-7 and 77). The ACCC identified a number of impediments to any large scale importing of petrol by a rival firm; ACCC (2007, p. 20).

[3]        Mr Graeme Samuel, ACCC, Proof Committee Hansard, 7 August 2008, p. 14.

[4]        The majority of customers using Coles-Shell and Woolworths‑Caltex outlets get a 4 cents a litre discount by presenting a shopper docket obtained by spending over $30 in one of the affiliated supermarkets.

[5]        Mr Charles Wright, Neumann Petroleum, Proof Committee Hansard, 17 July 2008, p. 15.

[6]        Mr Andrew Fischer, Australian Farmers Fuel, Proof Committee Hansard, 21 July 2008, p. 19.

[7]        Among variants suggested are discounts for locals, happy hours, lucky dips and member discounts; Informed Sources, Submission 22, p. 15.

[8]        WA Department of Consumer and Employment Protection.

[9]        Gull Petroleum, cited in ACCC (2007, p. 246). Concerns about this rolling price strategy are also expressed by the Australasian Convenience and Petroleum Marketers Association, Submission 6, p. 5; and Trade Practices Committee of the Business Law Section of the Law Council of Australia, Submission 21, p. 5.

[10]      Mr Barrie Cassidy, ACCC, Proof Committee Hansard, 7 August 2008, p. 14.

[11]      RACWA, Submission 20, p. 4.

[12]      Mr Graeme Samuel, ACCC, Proof Committee Hansard, 7 August 2008, p. 14.

[13]      Mr Barrie Cassidy, ACCC, Proof Committee Hansard, 7 August 2008, p. 14.

[14]      A service station owned by an independent operator, but having the branding of an oil company or independent chain. This type of site makes up a majority of regional sites.

[15]      These are sites that are owned by a large independent company. In Western Australia, these companies are Gull, Peak and United. These sites are predominantly located in the Perth metropolitan area.

[16]      These are sites that have no branding, and are owned by an independent operator.

[17]      WA Department of Consumer and Employment Protection, Submission 5, p. 13.

 

Coalition Senators' critique of Labor’s Interim Report into the proposed National FuelWatch Scheme

[1]        House Hansard, Questions Without Notice, 28 May 2008.

[2]        House Hansard, Matter of Public Importance, 14 May 2008

[3]        Sunday Times, 30 March 2008, p. 26 (He has since asserted he was misquoted although a clarifying statement was not issued).

[4]        ABC Insiders programme, 17 August 2008.

[5]        Mr Terrence Conroy, Victorian Automobile Chamber of Commerce, Proof Committee Hansard, 7 August 2008.

[6]        Mr Jim Murphy, Treasury, Proof Committee Hansard, 11 August 2008.

[7]        Mr Damien Carew, Franchisee, APCO Service Stations Pty Ltd, Proof Committee Hansard, 7 August 2008, p. 44.

[8]        Proof Committee Hansard, 16 July 2008, p. 5.

[9]        Proof Committee Hansard, 16 July 2008, p. 3.

[10]      Proof Committee Hansard, 11 August 2008, p. 28.

[11]      Proof Committee Hansard, 7 August 2008, p. 55.

[12]      Proof Committee Hansard, 5 June 2008, pp 19 and 40.

[13]      Proof Committee Hansard, 11 August 2008, p. 3.

[14]      Professor Don Harding, Proof Committee Hansard, 7 August 2008, p. 22.

[15]      Professor Frank Zumbo, Proof Committee Hansard, 1 August 2008, p. 40.

[16]      Henry Ergas, Proof Committee Hansard, 11 August 2008, p. 7.

[17]      Proof Committee Hansard, 11 August 2008, p. 30.

[18]      John Chapman, Executive Director, Motor Trade Association SA (Inc), Proof Committee Hansard, 21 August 2008, p. 10.

[19]      Matthew Hanton, Senior Analyst, Royal Automobile Association of South Australia, Proof Committee Hansard, 21 August 2008, p. 4.

[20]      RACWA, Submission 20, p. 5.

[21]      Mr Barrie Cassidy, ACCC, Proof Committee Hansard, 7 August 2008, p. 14.