Tuesday, January 16, 2007

Petrol at center of news again ...

Fueltrac has hinted that Australia's major retailers may be sustaining artificially inflated petrol prices by offering petrol discount vouchers. Petrol prices have remained around $A1.20 a litre despite predictions the decline in US crude oil prices would result in retail prices in Australia falling as low as $A1 a litre. Fueltrac said prices never declined because major retailers Woolworths Limited (ASX:WOW) and Coles Group Ltd (ASX:CGJ) expanded their petrol discount schemes in the lead-up to Christmas. Customers were entitled to savings of up to 10c per litre once they spent $80 or more, but this kept pump prices at high levels as the retailers moved to maintain profit margins. Woolworths hit back and have said that its petrol prices follow those of other petrol retailers such as Mobil Oil Australia and BP Australia, who are not affiliated with any supermarkets.

It makes you think about competition in the industry where prices can be kept at artficial high levels. And speaking of Petrol Qantas (ASX:QAN) does not intend to drop their fuel surcharge either. They are also getting pressure from competitors as Air Canada is seeking permission to enter the Australian air space.

Good Luck Investing

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