Motorists across South-East Queensland are bracing for a potential return to the dreaded 'unfair' unleaded fuel price cycle, following sharp increases at the bowser in recent days. Some service stations have reportedly hiked petrol prices by as much as 30 cents per litre over the past week, sparking concerns among consumer advocates.

While the average unleaded petrol price in Brisbane hovered around 172.1 cents per litre at the beginning of the week, approximately ten percent of stations throughout the region have seen prices surge to just shy of $2 per litre. This sudden escalation is viewed by some as an attempt by fuel retailers to re-establish the price cycle behaviour that previously left consumers disadvantaged.

The Re-Emergence of Price Volatility

An economic analyst from a prominent motoring advocacy group indicated that this pattern mirrors the initial 'price hike phase' characteristic of the historical fuel cycle. "We believe this signals fuel companies beginning to reassert a price cycle," the analyst stated. "They typically hike prices at a select number of sites, hold them high for a period, and if others don't follow suit, prices eventually descend again."

For an extended period, until February of this year, South-East Queensland experienced a six to eight-week-long price cycle. During this cycle, individual sites would see prices jump dramatically by 50 to 60 cents in a single hit, followed by a gradual discounting phase over approximately six weeks. The collapse of this cycle, following global market shifts, led to a period of fairer deals for motorists, with significantly lower average retail margins.

Indeed, a recent fuel price report for the June quarter revealed that the indicative retail margin for unleaded petrol had fallen to 10.5 cents per litre, a stark contrast to 21.2 cents per litre observed in the March quarter. Retail margins in South-East Queensland haven't been this low since 2019, according to industry data.

Excise Tax and Market Dynamics

These recent price adjustments occur in the context of the federal government's fuel excise discount being halved on July 1. The full excise is slated to return at the start of next month, which is projected to add an estimated 32 cents per litre to fuel costs. This impending increase adds another layer of complexity to the current market behaviour.

However, representatives from convenience and petroleum marketers associations offer a different perspective. They argue that the fuel price cycle is a natural indicator of competition within the market. According to one industry leader, Rowan Lee, CEO of a major petroleum marketers association, "The fuel price cycle is starting to come back, and Brisbane is no different to Sydney and Melbourne; South-East Queensland isn't an outlier in that regard at all." He explained that some businesses lead the market down while others follow, and similarly, some will lead the market up, with others trailing.

Mr. Lee also suggested that service stations that have pushed prices up by 30 cents are unlikely to retain customer loyalty. "Everyone can jump on their apps and see where the cheapest fuel prices are in their areas, and that's what we encourage people to do," he advised, highlighting consumer power in a competitive landscape.

The Debate Over Regulation

The apparent attempt to reintroduce the price cycle has reignited calls for stronger market regulation. Analysts from motoring bodies suggest that measures such as a cap on petrol price rises, for example, a five-cent per litre per day limit – a concept previously floated by political parties – could be beneficial. Modelling indicates such a cap could either eliminate the price cycle entirely or revert it to a more consistent weekly cycle, fostering a greater level of competition and predictability for consumers.

Conversely, the petroleum industry argues that imposing retail fuel price caps could have detrimental effects. Mr. Lee contended that during a fuel crisis, many service stations might simply choose not to operate if they were forced to sell fuel at a loss. "Why would you open your shop if you're going to lose 15 cents a day on every litre?" he questioned, emphasizing the financial viability challenges such caps could create for businesses.

As motorists in South-East Queensland navigate these fluctuating prices, the debate between market competition and consumer protection continues, underscoring the ongoing challenge of ensuring fair fuel costs.