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Law primes pump price

MECHANISMS allowing the WA Government to set the maximum wholesale petrol price at fuel terminals will be in effect by the end of the week.

The mechanisms are the second part of the Petroleum Pricing Amendment Act to take effect.

The third part of the Act, which will let the Government set the maximum retail price in regional areas, is expected to come into effect by the end of April.

The first part of the Act created the controversial FuelWatch system that requires petrol stations to nominate the price they will be selling petrol for and to stick to that price for the next 24 hours.

Independent service station operators believe FuelWatch has given the large oil companies an easy way to undercut them.

But even the oil company sites are finding the WA market tough. Duncan Wilson, manager of Shell multi-site franchise operator Novek, said this was a very tough time in the industry.

“Our dealer margins are down around two cents in some places,” Mr Wilson said.

“We’ve got a couple of sites that have become marginalised by the Government’s pricing approach.

Mobil Oil Australia spokesman Alan Bailey said the petroleum industry had some concerns about the Government’s plans for pricing caps.

“We have some specific concerns about the way the system will be brought in,” Mr Bailey said.

Shell WA oil products representative Ken Allender said there could be some significant problems if the wholesale price was not set properly.

“We prefer Governments to leave pricing alone. In WA the oil companies are delivering petrol that’s as cheap as you’d get anywhere in the world,” Mr Allender said.

RAC senior engineer policy, Mike Upton, said the wholesale price fixing regulations could be good or bad for motorists — depending on how the Government set them.

“If the Government sets it too high motorists will suffer because the fuel price will go up. If it is set too low, some operators will go out of business,” Mr Upton said.

“We’re saying the Government should make the whole pricing structure transparent. It should display the terminal gate prices on its FuelWatch website so the public can see what sort of margins the oil companies put on to petrol.”

Mr Upton said WA had a maximum retail price cap through the 1980s and early 1990s that was removed because it had proved ineffective. This wholesale regulation was a very similar mechanism.

“The difficulty for the Government is determining what the wholesale price should be. And it’s not static either. The price of crude oil moves up and down and exchange rates change,” he said.

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