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Getting a Fair Deal for Western Australian Motorists

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Getting a Fair Deal for Western Australian Motorists SELECT COMMITTEE ON PRICING OF PETROLEUM PRODUCTS GETTING A FAIR DEAL FOR WESTERN AUSTRALIAN MOTORISTS Report 12 October 2000 Further copies available from – State Law Publisher 10 William Street PERTH WA 6000 Telephone: (08) 9321 7688 Facsimile: (08) 9321 7536 Email: [email protected] Note: This Report is available free of charge on the Internet at - www.parliament.wa.gov.au Published by the Legislative Assembly, Perth, Western Australia 6000 Printed by the Government Printer, State Law Publisher SELECT COMMITTEE ON PRICING OF PETROLEUM PRODUCTS GETTING A FAIR DEAL FOR WESTERN AUSTRALIAN MOTORISTS Presented by: Mr Dan Sullivan MLA Laid on the Table of the Legislative Assembly on 12 October 2000 Select Committee on Pricing of Petroleum Products i TERMS OF REFERENCE On 6 April 2000, on the motion of the Hon. D.J. Shave, MLA, Minister for Fair Trading, a Select Committee was appointed with the following terms of reference - (1) To investigate and report on the wholesale and retail price of petrol fuel and LPG Autogas petroleum products in metropolitan and non-metropolitan Western Australia, and in particular – (a) the reasons for differences in the price of petroleum products in metropolitan and non-metropolitan Western Australia; (b) the reasons for significant price fluctuations in petroleum products; (c) the impact of State and Federal Government policies, taxes and charges on the price of petroleum products in both metropolitan and non-metropolitan areas of the State; (d) the effect on the price of petroleum products of current changes in the system of petroleum product franchising throughout Western Australia; (e) the reasons for the high cost of LPG Autogas in Western Australia relative to other Australian States; (f) whether legislative intervention is necessary or desirable to reduce the difference in the price for petroleum products within and between metropolitan and non-metropolitan areas of Western Australia; and (g) recommendations for any other measures to reduce the price difference for petroleum products within and between metropolitan and non-metropolitan areas of Western Australia. (2) That the committee finally report by 30 September 2000. REAPPOINTMENT OF COMMITTEE AND EXTENSION TO REPORTING DATE Following the prorogation of the Third Session of the 35th Parliament, the Committee was reappointed on 9 August 2000 with the same terms of reference, and on 14 September 2000 the reporting date was extended to 12 October 2000. ii Select Committee on Pricing of Petroleum Products Select Committee on Pricing of Petroleum Products iii COMMITTEE MEMBERS CHAIRMAN Mr Dan Sullivan MLA (Member for Mitchell) ............................................................ DEPUTY CHAIRMAN Mr Larry Graham MLA ............................................................ (Member for Pilbara) MEMBERS Mr Bob Bloffwitch MLA ............................................................ (Member for Geraldton) Hon. Julian Grill MLA ............................................................ (Member for Eyre) Mr Max Trenorden MLA ............................................................ (Member for Avon) COMMITTEE STAFF CLERK TO THE COMMITTEE Mr Keith Kendrick SENIOR ADVISER Mr Allen Tenger RESEARCH OFFICER Mr Mick Drover SECRETARY Mrs Patricia Roach COMMITTEE ADDRESS Legislative Assembly Contact: Keith Kendrick Parliament of Western Australia Tel: [08] 9222 7279 Harvest Terrace, Perth 6000 Fax: [08] 9222 7803 Committee Home Page: www.parliament.wa.gov.au iv Select Committee on Pricing of Petroleum Products Select Committee on Pricing of Petroleum Products v TABLE OF CONTENTS Page No Terms of Reference...........................................................................................................................i Reappointment of Committee and Extension to Reporting Date .................................................i Committee Members ..................................................................................................................... iii Committee Staff ............................................................................................................................. iii Committee Address........................................................................................................................ iii Ministerial Direction..................................................................................................................... vii Chairman’s Foreword ....................................................................................................................ix Executive Summary........................................................................................................................xi Glossary ........................................................................................................................................ xiii Summary of Findings and Recommendations.............................................................................xv 1. INTRODUCTION...................................................................................................................1 1.1 OVERVIEW ............................................................................................................1 2. DISCOUNTING AND PRICE SUPPORT............................................................................5 3. COUNTRY COSTS.................................................................................................................7 3.1 COUNTRY IMPACTS............................................................................................7 3.2 PUBLIC TRANSPORT DISPARITY .....................................................................7 3.3 UTILITIES AND OVERHEADS............................................................................7 4. LEGISLATION AND INDUSTRY REGULATION ...........................................................9 4.1 COMMONWEALTH LEGISLATION ...................................................................9 4.2 STATE LEGISLATION..........................................................................................9 4.3 REGULATED FUEL PRICES - WESTERN AUSTRALIA ................................9 5. WORLD PARITY PRICING...............................................................................................13 6. LIQUEFIED PETROLEUM GAS (LPG)...........................................................................17 6.1 MARKET OVERVIEW (LPG) .............................................................................17 7. ADDRESSING THE TERMS OF REFERENCE..............................................................19 7.1 THE REASONS FOR DIFFERENCES IN THE PRICE OF PETROLEUM PRODUCTS IN METROPOLITAN AND NON-METROPOLITAN WESTERN AUSTRALIA.....................................................................................19 7.2 THE REASONS FOR SIGNIFICANT PRICE FLUCTUATIONS IN PETROLEUM PRODUCTS.................................................................................24 7.3 THE IMPACT OF STATE AND FEDERAL GOVERNMENT POLICIES, TAXES AND CHARGES ON THE PRICE OF PETROLEUM PRODUCTS IN BOTH METROPOLITAN AND NON-METROPOLITAN AREAS OF THE STATE ....................................................................................................29 7.4 THE EFFECT ON THE PRICE OF PETROLEUM PRODUCTS OF CURRENT CHANGES IN THE SYSTEM OF PETROLEUM PRODUCT FRANCHISING THROUGHOUT WESTERN AUSTRALIA.............................38 7.5 THE REASONS FOR THE HIGH COST OF LPG AUTOGAS IN WESTERN AUSTRALIA RELATIVE TO OTHER AUSTRALIAN STATES.................................................................................................................39 7.6 WHETHER LEGISLATIVE INTERVENTION IS NECESSARY OR DESIRABLE TO REDUCE THE DIFFERENCE IN THE PRICE FOR PETROLEUM PRODUCTS WITHIN AND BETWEEN METROPOLITAN AND NON-METROPOLITAN AREAS OF WESTERN AUSTRALIA. ....................................................................................45 7.7 RECOMMENDATIONS FOR ANY OTHER MEASURES TO REDUCE THE PRICE DIFFERENCE FOR PETROLEUM PRODUCTS WITHIN AND BETWEEN METROPOLITAN AND NON-METROPOLITAN AREAS OF WESTERN AUSTRALIA.................................................................53 vi Select Committee on Pricing of Petroleum Products 8. ADDITIONAL ISSUES RAISED WITH THE COMMITTEE........................................61 8.1 FUEL QUALITY...................................................................................................61 8.2 RENT BASED ON TURNOVER .........................................................................61 APPENDICES APPENDIX ONE ..............................................................................................................63 STATEMENT OF ACTUAL (OR ESTIMATED) COSTS OF THE OPERATION OF THE COMMITTEE IN ACCORDANCE WITH STANDING ORDER 276 APPENDIX TWO .............................................................................................................67 STATE GOVERNMENT FUELS AND PETROLEUM PRODUCTS CONTRACT 3998 – EX BOWSER APPENDIX THREE.........................................................................................................69 NGV ESTIMATED LIFE-CYCLE COST CALCULATOR APPENDIX FOUR............................................................................................................71 DISCUSSIONS HELD WITH THE COMMITTEE APPENDIX FIVE .............................................................................................................73 THE COMMITTEE’S ACTIVITIES APPENDIX SIX ................................................................................................................75
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