Apparently Nick Xenophon has decided that FuelWatch is bad. According to ABC online:
“When you consider that four government departments have said that this could actually put prices up rather than down, when you’ve heard the evidence from the Senate committee process it’s been quite damning,” he said…”We’ve seen from the Perth experience that it has forced a number of independent operators out of business,”
As Joshua Gans points out, this is just a tad logically inconsistent. How are the prices (and thus retailer margins) simultaneously going to go up, and independent retailers go out of business?
For what it’s worth, FuelWatch might have made a couple of cents difference to the price of petrol. It might have also removed a lot of the angst over petrol prices, which has more to do with the fact that people feel like they’ve been “ripped off” when they drive past a petrol station selling for a cent a litre less than what they’ve filled up at than the actual price. But, as every inquiry on the issue has revealed, there’s not very much retail margin on petrol anyway (though the margins are most likely higher right now than they’ve been for some time).
Incidentally, if the price of oil stays at its slightly less stratospheric levels, it might provide the government the excuse to put petrol back in the emissions trading scheme. But I’m not holding my breath…
“put petrol back in the emissions trading scheme.”
It actually never got taken out. Presumably you mean withdraw the commitment to reducing petrol to offset the effects of the ETS.
On Fuelwatch, the government might be too unhappy about this outcome, since it takes the heat off the government on petrol prices. They can now blame the opposition when prices go up. On the other hand, with Fuelwatch, they would be blamed when prices go up for having a worthless scheme.
Spiros I agree with the blame game however I did hope to see some pressure put on country fuel agents, who as suppliers to single outlet locations, have been ripping us off for years.
“this is just a tad logically inconsistent. How are the prices (and thus retailer margins) simultaneously going to go up, and independent retailers go out of business?”
No inconsistency in the world of Post Hoc Propter Hoc.
Oh dear, I hope Xenophon doesn’t end up being a carbon copy of Steve Fielding without the moralism.
I wonder if the four public servants who wrote those notes have been taken out and shot at dawn yet?
Spiros: It’s six of one and half a dozen of the other. The government’s proposal means that whatever the carbon price, there will be no effect on the cost of petrol from the scheme until the offsetting stops.
A spokesman for the independents wrote a piece in Crikey a few months ago. While making some very similar absurd arguments, he actually stated most independents are simply shadowing the majors’ prices but staying 1c or 2c cheaper at all times - which isn’t competition anyway.
And if their profit margins are as small as they claim, it means they’re relying on the majors’ overcharging just to stay in business…why should that be supported?
They might be thinking the big fuel retailers will do what Coles and Woolworths are accused of doing to fruit and veg stores nearby. Lower prices temporarily around the independent fuel outlets until the independent stores go out of business then raise them up afterwards.
I think FuelWatch is probably a waste of money as its not going to significantly reduce prices even if there aren’t competition problems with it (perhaps the day of the independent fuel retailer is over anyway).
Fuel watch was a poorly executed PR job that wouldn’t have made any difference to most fuel buyers - that is city car drivers who don’t get fuel on the company account. iirc company fuel cards are at an agreed price not daily pump price - anyone tell me different? And 2cents price difference? how many ks would you drive across town to save 35L x 2c = 70cents on a half tank fill up? Or even 70L x 5 C= $3.50. At 12L to 100ks around town that would be $1.60 for every 8 ks. (so clearly those smarties out there will have answered my rhetorical question with “I’d drive a bit less than 16 ks round trip to save 30 cents on a fill up” - however thats not counting time value)
It would have helped our rural brothers and sisters by pointing out how much they are being ripped off by their friendly local trader although the more savvy of them are filling up from the cheaper fuel tanks on the farm anyway and then claiming it as a tax deduction.
I thought Fuelwatch was in the area of consumer affairs. An opportunity for a little bit of transparency when it comes to the greedy games the oil and supermarket companies play.
If you listen to the dominant media narrative, Rudd slipped into government, telling the punter he would keep a check on increasing prices. Media has bagged grocery and fuel price openess even before it was set up and given a fair go.
It would be hard to imagine that the measures have not been killed off by the vested interests.
Expect donatations to Nick and Steve from predictable sources.
They both still say they’re “negotiable” of course.
Didn’t take the lobbyists long to get to the virgin senator. Wonder how much other decisions will cost them?
FXH,
I don’t know about company fuel cards, but on a “novated lease” the lease company pays your fuel costs - at ever-changing pump prices - having made an estimate of your monthly fuel costs based on (estimated annual) kilometres, and the type of vehicle.
It’s not a free ride, but these dollarss are taken from your pre-tax income, so it’s a tax concession.
FuelWatch has already served its purpose - being seen to Do Something about which nothing much can be done. Spiros is right - I don’t think Rudd will lose too much sleep over its demise. Especially as he can now, most unfairly, blame the “unrepresentative swill” the next time petrol prices spike up.
I don’t agree that Fuel Watch was just a stunt, about being seen to “Do Something”.
Fuel Watch was - is - as far as I can tell a good idea. It does seem to reduce fluctuations in prices and lower costs by a few cents (without reducing government revenue which the Libs’ dopey plan would do).
What I find irritating in all this is mischief done yet again by the Murdoch press. Yes, ministers were asked to provide cabinet submissions, and some of those submissions were against Fuel Watch. But after hearing all the views from different government departments and agencies, those against Fuel Watch obviously had the weaker arguments and evidence (and expertise?).
All the leaks really told us is that the Rudd Government is doing its job - carefully weighing and arguing the merits of proposals like this.
In knocking this perfectly good idea on the head, Xenophon pointed to the dissenting submissions in the cabinet debate. Shows how crucial cabinet secrecy is to good decision-making.
On behalf of South Australia, I apologise to the rest of you for Senator Xenephon.
Actually, I happen to agree with him about FuelWatch, but for quite different reasons to his. (Basically I think fuel is still too cheap, and as Mr Holden has pointed out you won’t save a lot if it’s 2c/l cheaper.) I deplore his idiot populism on the Murray, though.
GB - do you know which (if any) government departments supported FuelWatch?
Let’s go back to the point that was made when this was originally raised. Finance routinely opposes anything that involves spending, and these sorts of briefing notes are often concocted at relatively junior levels with short notice - they don’t actually represent some form of rigorous policy input, but comments by a dep’t.
I imagine the view that the gov’t is relying on remains the ACCC’s.
If FuelWatch is such a bad idea, then we can expect the West Australian Liberals (whose idea it originally was) to put forward a policy to abolish it, which will have them marching in step with their Federal colleagues. Anyone want to bet on that? It’s an issue Labor can run with in the WA election – that if successful the the State Liberals will abolish FuelWatch on the orders of their Federal colleagues.
It’ll be interesting to see what happens. Xenophon on Today this morning was saying how great he thinks Bowen is and how they’re pretty much on the same page.
And Bowen’s been out doing interviews as well. He neatly refuted the claim it will put independents out of business - no more have closed down in WA than anywhere else in Australia - and is saying the government is willing to negotiate.
Xenophon gave himself a hedge as well - said he’d need to see more evidence.
Aren’t the Greens also opposed to FuelWatch saying it may lead to price increases - though you’d think they’d like that
@ Francis Xavier Holden
I agreee at 2c a Litre there is not much difference, however here in Canberra, I live on the North side and work in the South, so depending on which way I drive I can pass 4-5 different service stations, with price range being greater than 10c a litre- That makes a huge difference, especially considering I am not going out of my way, the situation was the same in Sydney where I lived in the South west and worked in the inner West. With fuel watch I could concievably have saved myself $5-$10.00/ week simply by checking where petrol was cheapest for that day!
I am extremely disappointed that fuel watch is not going ahead.
FXH raises the myth of the perpetual bargain seeker again.
I have 8 servos near me, within 5-10 minutes of my home. They are all on busy traffic arteries. If you pick the wrong one (i.e. the most expensive) to buy your betrol from that’s tough. It takes too long to negotiate the traffic to get to a cheaper one (and thats if you knew it was going to be cheaper, which of course you dont, because once you’ve bought your petrol you stop looking at prices).
Fuel Watch would have enabed me to pick my servo in advance and proceed straight there to get the cheapest price. Turnaround time would have been neglibable because once the decision is made I can use the most appropriate (i.e. time-saving) route to get to the selected site without having to do the petrol runaround.
The price would be valid all day, so I could pick my time to avoid the traffic.
I routinely find that I have filled up at $1.60 (or whatever) only to find the place down the road is $1.45 (or whatever). True, sometimes it goes the other way, but I’m still relying on pure luck to get a cheap price. If I was informed of the best price that would be a terrifc saving in time and money for me.
Alas, the cynics with agendas like FXH seem to have gotten their way, but remember this: an informed market is an efficient market. We’ve just lost the chance at a more efficient market.
Fuel cards are just charge cards for petrol - you pay the prevailing rate at the pump when you fill up.
FuelWatch was a waste of time, and probably would have fatally disrupted the weekly discount cycle that savvy motorists had come to synch with. It’s a wonder we don’t have MovieWatch to snuff out the outrage of Tight-Arse Tuesdays.
Aussie Bob: I dunno where you’re getting 15 cent variations in fuel costs. Over a week, sure. On the same day, the spreads I see are typically no more than a couple of cents per litre.
And I pay more so savvys can have tightarse tuesday. Inequality is bred purely from greed.
Robert, It depends on the time of day. I have seen the price at service stations in Sydney’s eastern suburbs vary by more than 10 cents a litre from the morning to the afternoon.
“and probably would have fatally disrupted the weekly discount cycle”
My god, who wadda thought it?
Mr Xenophon, I thank you from the bottom of my wallet, for I would have had to eat bread and dripping for the forseeable future were it not for the weekly discount cycle.
And all its associated entities such as the fortnightly benefit helecopter.
Unhinged: weekly discount cycle.
is that the cycle Robert M rides? Surely he wouldn’t ride it weakly, but.
And as far as the idea of owning a discount cycle…. well, Robert strikes me as a cyclist who’d go for quality.
I think so, but maybe he only rides it weekly because as a discount cycle it’s not up to daily use.
My motor scooter is looking a little bit the worse for wear at the moment actually - and my hand is similarly feeling a little bit worse for wear - after a low-speed self-inflicted tumble. Note to self: wet roads have a lower coefficient of friction, and braking techniques should be adjusted to compensate…
Which is very annoying, because on the pedal-powered two-wheeler front, I’ve just spent quite a deal of money on a new Giant road bike. Hybrids are great on urban bike trails, but trying to chase mates on racing bikes up long hill climbs too much like bloody hard work. Hopefully by this weekend my hand should have healed up
JohnL: fair point WRT price changes. Wednesday seems to be the big price swing day in Melbourne; morning it’s still cheap, evening it’s gone up 10c.
“Note to self: wet roads have a lower coefficient of friction, and braking techniques should be adjusted to compensate…”
If only Bon Jovi had thought to explain it this thoroughly, countless lives may have been spared.
Robert:
“Wednesday seems to be the big price swing day in Melbourne; morning it’s still cheap, evening it’s gone up 10c.”
Why is it so?
Why Wed.?
Why such a large margin?
Why weekly?
Why at all?
Genuine questions.
Input appreciated.
Hannah’s Dad: you might be interested in Joshua Gans’s long series of posts on fuelwatch.
Note how swiftly Fielding jumped on board as soon as he saw he didn’t have to be the one blocking it. He’s terrified of being the one person to block something it seems, and equally terrified of the double dissolusion (dissolusion of his party’s parliamentary presence that is).
I know he’s tried to borrow Xenophon’s stunts….maybe he should try wearing a chicken suit.
How are the prices (and thus retailer margins) simultaneously going to go up, and independent retailers go out of business?
I beleive the theory is taht the large chains can hedge theirprices across many sites (low prices in some, higher prices in others) which affords a competetive advantage independents do not have. Because the prices are locked 24hrs in advance, independents are powerless to respond.
Bob you flatter me so much I feel like an independent holding the balance in the senate.
Like Merkel I’m curious where you get a 15c spread - I’m sure you didn’t mean it literally but thats part of my point - its rarely more than a few cents spread. You (me) would gain more by sedate driving.
Its not being cynical to observe that this whole petrol price panic with political promises is largely nonsense.
Strangely Ms FX (now theres someone both genuinely cynical and with a real agenda) has found that the scruffy 7/11 which she drives past on the way to work twice a day is so consistently cheaper than anyone we’ve ever seen that it isn’t worth even thinking of going anywhere else.
“Like Merkel I’m curious where you get a 15c spread”
Well I can nelp out there - I believe those little individual containers of Vegimite are about 15c.
Merkel - I’m not sure this is on topic but how can a 4k weight difference in a bike make you really any faster? Having less to eat or going to the toilet earlier or wearing less clothes would have the same effect.
Or are you that fit and pumped to perfection that even stray sticker on the bike holds you back?
Ref.
Capt Beefheart http://www.youtube.com/watch?v=Kd6iTrXRDTU Lick My Decals Off Baby
John Prine http://www.youtube.com/watch?v=xp1mIYJNKWQ Your Flag Decal Wont Get You Into Heaven Anymore
“…wearing FEWER clothes” Aaargh…
Its not that I don’t think more information is useful - its that I dont think FuelWatch was going to do it for many reasons.
Maybe I’m a bit parochial - here in vic the RACV does a price watch which is useful - and names stations - I assumed each state had similar - they also do a rolling average I think which is even more useful.
todays prices:
Highest price today 159.9 c per litre
Lowest price today 141.5 c per litre
Average price today 144.9 c per litre
The spread between lowest and average is around 3.4c. (I excluded the highest as being an outlier as I can’t find out how many are above average) With to day being the cheapest day.
Within the 10 stations or so within 5 ks of me there is a 1 cent spread between highest and lowest.
Haha, I forgot about Capt’n Beefheart. Made Frank Zappa look normal.
[If FuelWatch is such a bad idea, then we can expect the West Australian Liberals (whose idea it originally was) to put forward a policy to abolish it, which will have them marching in step with their Federal colleagues. Anyone want to bet on that? It’s an issue Labor can run with in the WA election – that if successful the the State Liberals will abolish FuelWatch on the orders of their Federal colleagues.]
It seems the Federal Libs have been wedged by their WA counterparts who have vowed to retain Fuelwatch.
http://www.thewest.com.au/default.aspx?MenuID=77&ContentID=91198
Chris, the ACCC was the agency that seemed to have the decisive arguments on Fuel Watch. And the Rudd Government had fun using quotes made before the election by Peter Costello to the effect that the ACCC had the most expertise in this area.
Problem about cabinet leaks of this nature is that you only hear from the dissenters - “MINISTERS AGREE ON GOVERNMENT POLICY” is hardly a sexy headline. And it’s often hard to guage the depth of opposition to an idea on the strength of documents alone. A minister might be asked to supply the views of his department on an issue, and that department might say if they have to take a position - not that they really care that much one way or the other - they’re opposed. But in the hands of those at the Oz this is crisis, a split, the government pressing ahead regardless of advice by its own civil servants!
That’s what is so misleading about this kind of thing, how it can distort the debate, and why being able to hear all types of views in cabinet without the dangers of leaks is so important.
I would like to see a new wholesaler enter the petrol market but I guess that’s in the land of fairy tales where few but me here belong.
GB - what it looks like to me is that the ACCC had the argument which the Rudd government wanted for political reasons (must be seen to be doing something) rather than it convincing them. The Howard government was great at only finding advice they wanted to hear - this looks like more of the same, except they got caught.
In general I think the extra transparency of price information would be good, what I disagree with is the fixing of prices for 24 hours. Its 2008, surely we can just have live price information to websites?
Yeah but how does a website feed into on-the-road decisions? It’d be as useless as GroceryChoice unless I could quickly and cheaply access up-to-date information on the way to or from work (for example). This is what the 24-hour freeze is meant to give motorists: price certainty. Live information to in-car systems would be fantastic, but it’s going to take a long long time before everyone has access to that kind of hardware.
BBB
Fuel watch won’t help me one iota because from my understanding outlets in the bush would not be required to join in. So I would expect to still be paying min 10c pl more than those in the city. But having said that, xenophon worries me. He will play a spoiling role for the sake of a headline, and that is going to make life very difficult for the Govt. to bloody well govern.Add fielding into the mix along with an opposition that seems hell bent on opposing any and everything and I reckon we could be back at the polls tout sweet.
Forgetting Fielding and Xenophon personally, and the merits of this issue, this might be a broader problem with Senate independents - they need to keep in the public eye to have any real chance of re-election, so there’s a huge incentive to flip flop around, negotiate in public, do stunts, and generally go down the populist road.
[Yeah but how does a website feed into on-the-road decisions? It’d be as useless as GroceryChoice unless I could quickly and cheaply access up-to-date information on the way to or from work (for example). This is what the 24-hour freeze is meant to give motorists: price certainty. Live information to in-car systems would be fantastic, but it’s going to take a long long time before everyone has access to that kind of hardware.]
The WA Scheme has the ability to send the information to your email adress and via an SMS message to your mobile, as well as the fuelwatch prices being broadcast on Radio and TV (Ch 7 here broadcast the next day’s prices during it’s news bulletin.
BBB - how many times a day does the price of petrol change? Perhaps an SMS service would be sufficient for most? You could make the same arguments for price certainty for other goods as well. Fuel is just not that special.
Since price fixing works both ways - you also miss out on deeper discounts, there just aren’t they huge savings people think there will be - and even the government agrees only claiming very modest gains of 2-3c/litre rather than 10-15c which people are claiming here.
Mark - agreed - there’s a strong incentive for the independent senators to be seen to be doing “something” as well - and get great deals for the states they represent.
4 kg is about 5% of the combination of my weight and the bike’s weight.
That’s about how much I trailed my mate up the hill by…
The point is, the present government is being branded for doing nothing about inflation, yet denied a chance to introduce smaller scale consumer type plans, that may keep an eye corporate greed.
I just thought Fuel Watch was a clever way to bring down prices a bit without costing hundreds of millions in lost government revenue.
Even if you do plan to buy petrol on cheap Tuesdays to save money, you invariably run short and have to buy petrol on the really expensive days - happens to me all the time. Fuel Watch would have ironed out those big fluctuations.
The world’s full of cynics and experts. But I think the government got it right.
P.S. If Fuel Watch is so bad, why isn’t there a push to get rid of it in WA? Sounds like it’s pretty popular. I understand the website is used a lot.
Thanx for the Beefheart, Mr Holden. It made my evening. I might just have to go and put “Bongo Fury” on the turntable.
GB - you might want to read this link. It appears that whilst it has increased transparency, there is no evidence the WA scheme has actually reduced prices.
Probably does make people feel better though (and as stated in the article increases consumer education).
Interesting that Xenophon was so keen to rush in to show how much a political moron he is. On the national stage his gimmicks will be much easier to see as such and, easier to decipher as self-promotion.
My take on this is that I’d love to look up a website and find the cheapest petrol. Sure beats driving around several servos, heck I might even find some stations I didn’t know existed before.
That said, I used to run a little market stall, and I know that if the government came along and told me I had to keep my prices constant for a day I’d be pretty livid particularly if a competitor was offering a lower price and I couldn’t do anything about it.
My suggestion would be to have Fuel-Watch but to alter it in one or two ways. 1) change the price setting so that station operators can notify the market of what the prices will be for each hour. 2) Alter the rules so that the price that is set is a cap (I.e. the station can sell fuel for a maximum amount but allow them to drop the price if a competitor has cheaper fuel).
“That said, I used to run a little market stall, and I know that if the government came along and told me I had to keep my prices constant for a day I’d be pretty livid particularly if a competitor was offering a lower price and I couldn’t do anything about it”.
What price would have next day? Isn’t that what it’s all about?
“there is no evidence the WA scheme has actually reduced prices.”
Yes, Chris (a different one), this is the tedious nonsense that the opposition has been running and taken as gospel by media.
It is deliberately quite misleading because no one would expect overall evidence of lower fuel prices. Those prices are determined outside Australia.
Fuelwatch was about ridding Australians of this roller coaster game playing that petrol companies have been indulging in for ages.
It has only encouraged hording by the perfect few.. those savvy Howard lovers who fill up their 4 wheel drives on Tuesday and gutse the cheaper prices, as they would.
It’s obvious FXH does not do a lot of pushbike riding. Over a longish, hilly commute 4kg makes a really big difference.
Of course if the purpose of the exercise is exercise rather than transport then the extra work to pedal a lead-framed bike might be a feature, not a bug.
It’s not just the weight of the bike but the gearing, the geometry, the rolling resistance, etc etc. A road bike is far easier to get up hills than a hybrid or even a touring bike.
Going for an all carbon $5k bike would be evidence as a recreational/low grade rider that you’re either stupid, rich or both.
joe @60: if on average you end up with the same result - eg sometimes you get cheap tuesday, sometimes you get about the average and sometimes you pay a lot more than the average, but in the end you pay the same, then whats to be gained from FuelWatch?
Sure you lose the occasional bad feeling of getting “ripped off”, but you also lose the happiness of getting a bargain. And you’ve no extra money in your pocket than you would otherwise.