Tuesday, January 27, 2015
When To Buy Petrol (In Your Australian Capital City)
Last month, the Australian Competition and Consumer Commission launched a web page which suggests when the cheapest and most expensive times to buy petrol are. How does it do this? By keeping track of what is known as the ‘petrol price cycle’. Retail petrol pricing is a bit unusual. Overall retail petrol prices reflect the international price of petrol and the exchange rate. But overlaying that in the Australian capital cities are these regular (or at least semi-regular) patterns or cycles. That is, petrol prices reach a ‘peak’, then come down over a period of a couple of weeks, and then in the next few days shoot up again. Why? It is a little bit of a mystery; it could indicate some collusion between retailers but this is hard to show.
These ‘cycles’ make it somewhat predictable in terms of knowing when is the best time to buy petrol. We say somewhat here because the length of cycles can vary, and indeed have on average been becoming longer over the past few years – the average trough-peak duration in Australia’s five largest capital cities was one week back in 2009, but is now out to two and a half weeks (see the ACCC’s latest petrol monitoring report, p. 89) except in Perth. Further, in 2014, the petrol price cycle in these cities ranged from 13 days to 43 days. One theory is that a less predictable cycle is more profitable for retailers, but again it’s all a bit of an enigma.
There are a couple of things we do know, and when you first learn them they seem a bit surprising. One of those is that there is currently no day which is, on average, more or less expensive than the rest (p. 90), again except if you are in Perth (don’t fill up in the latter part of the week). Another is that the price increases before public holidays are no greater than any other time in the year, nor do public holidays appear to affect the timing of any price cycle increases (p. 94).
So I know petrol price cycles exist, and that regular information is available on them. And yet I am a terrible consumer, because they have never explicitly factored into my petrol-purchasing decisions. I tend to just buy petrol whenever I am out driving, which is itself a rational factor, though probably still not the best move given petrol stations are hardly a long way from my house. I am probably one of those consumers that the ACCC people shakes their head at. Still, I guess it is their job to at least try and help us.