Tuesday, July 14, 2009

Petrol Skirmishes

From today's Courier-Mail:

The battle for the consumer dollar reached new heights yesterday when Woolworths and Coles announced unprecedented discounts, offering 40¢ a litre off at the bowser for shoppers who spend $300 on their groceries in one hit.

For you non-Australians, what this means is that the two largest supermarket chains in Australia (which control nearly the entire market in a duopoly) are offering a deal (which ends on Thursday) that amounts to the equivalent of a A$1.50/gallon discount when you purchase fuel at one of their affiliated stations, if you buy a lot of groceries at once. It's a pretty amazing offer, given that prices average over A$5.00/gallon right now, but it also puts enormous pressure on the remaining petrol chains (two of the four are controlled by Woolies and Coles), which means we'll probably end up with another duopoly in that market in a few years.

Petrol here is generally more expensive than it is in the United States. But I am not exactly sure why. It could be due to a lack of competition, but I suspect that it is more due to Australia being a small, isolated market. I used to think that the federal government was collecting huge taxes on it, the way European governments do to help subsidize public transport, for example. Given that Queensland only recently removed a multi-year 9.2¢/litre subsidy, this suggests that governments here don't tax fuel consumption as much as they encourage its purchase. I'm afraid that Aussies are nearly as enamoured with their cars as Americans are, although they tend to drive smaller ones for more years. (When we were in the States last month it was remarkable how many enormous pick-ups and SUVs (4WDs) we still saw everywhere, despite the fact the U.S. has faced some huge fuel price increases in the last five years). Perhaps this love of cars reflects the fact that Australia, like the U.S., is a wide-open country with vast distances between its cities. Building a more extensive national train network, for example, would be enormously expensive. I am very happy with Brisbane's bus and rail network, by the way. For a city that has half the population of Atlanta, Brisbane's public transport is many times better. V. and I are able to use the trains, buses, and ferries so much that we only need to fill the tank of our little Yaris once or twice a month. And, in the meantime, it looks like we can save a few bucks at the bowser when we put a few more avocados and jars of Dick Smith peanut butter in our grocery trolley.

Yes, you read that last sentence correctly. I am now eating Australian peanut butter and I like it.


Mooselet said...

Unfortunately Coles and Woolies will recover this cost by raising prices on some of their in-house goods.

I find that Freedom Fuel has consistently lower prices on diesel - which is what my vehicle runs on - than Shell or Caltex, which are connected with Coles and Woolies respectively, even with the regular discount.

I don't mind the trains, but the buses out in the outer suburbs are substandard. I'm investigating different modes of public transport when I start my new job next month and I'm getting discouraged. Still, it beats the 'T' back in Boston.

Jason said...

Ditch the car and jump on the bike Eric! You can burn your groceries instead of petrol.