Tuesday, July 19, 2005

Just Look At WA Fuel Pricing

No wonder they weren't selling much fuel at this petrol station

Fuelwatch was set up so that the common practice of petrol stations changing their prices, usually upwards, depending on the time of the day, would cease. Why should petrol be more expensive on the way home than the way to work? The market forces for fuel pricing don't work that quickly.

Some independent station manager decided to drop his price by three cents a litre when he wasn't getting any business. Then he was slapped with a $1600 fine for doing so.

Fuelwatch was designed so that petrol stations would put their most competitive pricing in or risk not selling any petrol for a whole day. This is what this independent owner soon discovered. He wasn't competitive, perhaps being too greedy, and suffered the consequences. His behaviour indicates that the system works reasonably well. Be competitive and realistic or lose business.

Were the motorists benefitting or just the petrol station owner? Apparently motorists could buy cheaper fuel just around the corner so they weren't overly disadvantaged.

Under the Fuelwatch scheme of things you can indicate a higher price for fuel for tomorrow but not raise your price if you, in fact, change your mind. Dropping the price is not an option however. This system seems to have worked well in the time that it has been running.

On the news tonight they interviewed the station owner again and people had been offering donations to help pay the fine!! Why? The blighter was ripping them off. He was obviously three cents per litre overpriced and was paying the penalty business-wise for doing so.

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