Newspaper article The Northern Star (Lismore, Australia)

The Petrol A[euro][approximately]cost Conspiracy'; Disparity between States Raises Questions of How the Oil Companies Set Their Prices

Newspaper article The Northern Star (Lismore, Australia)

The Petrol A[euro][approximately]cost Conspiracy'; Disparity between States Raises Questions of How the Oil Companies Set Their Prices

Article excerpt

Byline: Tim Howard

A COMPARISON of petrol pricing in rural NSW and Queensland in a time of falling oil prices reveals a staggering difference between the two states that could have the southerners muttering about conspiracy theories.

Consumer advocate Professor Frank Zumbo poses plenty of good questions about the decision-makers of the oil companies and petrol distributors in both states.

The University of NSW academic keeps a close watch on the petroleum industry

and its distribution practices and has come up with three opt-ions that could explain why prices a[approximately]defy gravity' at times when consumers should be enjoying a benefit.

OPTION 1: A price war in Sydney forces the major oil companies to drop their wholesale prices to a below cost or predatory level.

"This is something called the waterbed effect," Prof Zumbo said. "When the pressure comes down in one area the effect is a rise in price somewhere else.

"In this case it is the NSW rural consumer who suffers.

"It's a matter of a cosy club of oil companies keeping the prices inflated in rural NSW.

"Why do they do it? Bec-ause they can."

Prof Zumbo says the ACCC and the Federal Government's petrol pricing commissioner have failed to stop oil companies forming pricing policies to disadvantage consumers.

OPTION 2: The major retailing outlets, including Coles and Woolworths, form their own a[approximately]cosy club' and follow one another's pricing directions.

"They reason the consumer has become used to petrol prices being high and keep the retail price high to maximise their profits," he said.

OPTION 3: This is perhaps the most sinister option: that competition and consumeraffairs have been put on the back burner.

"Under Federal Labor the role of competition and consumer protection has been relegated from a department to oversee it to a parliamentary secretary," Prof Zumbo said.

"They made a fuss aboutappointing a petrol price commissioner, but he has been so quiet most people would not know who he is.

"For the record, his name is Joe Dimasi, but where is he? …

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