Petrol prices along the Princes Highway at Albion Park Rail shot up by around 20 cents a litre in just a few hours on Tuesday.
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On Tuesday morning, the two Coles Express service stations on the highway located at the northern and southern ends of the suburb were selling Premium 95 unleaded for a massive 194.9 cents a litre.
All the stations in between had much lower prices – around 161 cents – on their roadside boards.
That all changed in a few hours; by the early afternoon the cheaper stations – which included 7-Eleven and BP – had pushed up the price for Premium 95 to at least 181.9 cents.
There wasn’t anything unusual about that either, according to Australasian Convenience and Petroleum Marketers Association CEO Mark McKenzie.
When the Mercury spoke to Mr McKenzie on Tuesday morning, he said the other stations would soon raise their prices – and he was proved correct.
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It was part of the petrol price cycle that operates in the Illawarra and Sydney, where competition between petrol stations drives prices down until some start losing money and push them back up again.
“They go down below their average price until they get to a point of pain then someone – it’s usually one of the bigger players – will decide they’re losing too much money and they’re not prepared to keep selling large volume at lower costs,” Mr McKenzie said.
“You get down to a point where you hit a threshold of pain and someone says, ‘I’ve had enough’ and they go up.”
The price of petrol falls gradually through discounting but – as Tuesday’s example showed – they tend to rise very quickly.
“The reason for that is pretty simple,” Mr McKenzie said.
“If you’re at a point where you’re way down the bottom and you’re losing money, you don’t lose less money slow – that’s a natural ebb and flow of business.
“You recoup losses quickly and then competition drags you down again.
“That’s typical of normal market behaviour.”
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Mr McKenzie said motorists should take action when they see some petrol stations start to raise their prices and gaps of 10-20 cents a litre begin to appear.
“The key thing here is if people are seeing that variance, now’s the time to buy,” he said.
“You need to buy when it’s at the bottom of the cycle.
“Forget about the branding, what it’s telling you is the cycle’s going up and it’s now time to try and buy before it goes to the top of the cycle.”
Glen Humphries
I'm an award-winning senior journalist with the Illawarra Mercury and have well over two decades' worth of experience in newspapers. I cover the three local councils in the Illawarra for the Mercury, state and federal politics, as well as writing for the TV guide. If I'm not writing, I'm reading.
I'm an award-winning senior journalist with the Illawarra Mercury and have well over two decades' worth of experience in newspapers. I cover the three local councils in the Illawarra for the Mercury, state and federal politics, as well as writing for the TV guide. If I'm not writing, I'm reading.
