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Comissioner surprised that petrol not coming -

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ELEANOR HALL: The petrol commissioner Pat Walker says he's surprised and disappointed at the
revelations by the petrol company Shell that retailers aren't passing on price reductions.

New Limited is reporting that the Shell oil company has lowered its wholesale fuel prices and had
expected its retail outlets, including Coles, to follow suit.

But retailers argue it's just not that simple with a volatile market. They say prices will come
down but not yet.

Michael Troy spoke to petrol commissioner Pat Walker about the current movements in fuel prices.

PAT WALKER: We're seeing general reductions of about five cents a litre from this time last week,
so reductions are flowing through to the petrol pump but we'd like to see those accelerate and
continue as they should indeed because we've seen now about a $20 reduction in the Singapore Mogas
price from about eight days ago.

MICHAEL TROY: Now Shell Australia has actually said that it's lowered its wholesale fuel price but
it's not being passed on by retail outlets quick enough. Does that surprise you? (* See Editor's
Note.)

PAT WALKER: Well it's both surprising and disappointing. I think one of the great benefits of the
national FuelWatch program is that the prices will be very transparent and retailers will actually
be outed if they don't pass on wholesale price savings because they will have to anticipate what
their competitors are going to do and if they price themselves out of the market then people will
go to the cheaper stations.

Regrettably at the moment it is a confused marketplace out there. There are price ranges of at
least 15 cents a litre across our major capital cities, and it's very confusing and indeed
difficult to actually locate and identify whether particular branded stations or groups of stations
are effectively passing on the wholesale prices.

MICHAEL TROY: Are you keeping a close eye on what's happening out there?

PAT WALKER: We're keeping a very close and interested eye on it. We're monitoring each day and
we're tracking the Singapore benchmark prices, the wholesale prices and indeed the retail prices.

And I think, given the sudden drop in the international benchmark, I think it would be appropriate
for no price hikes to occur next week. That's a decision obviously for retailers in the petrol
industry, but given the rate of decrease and assuming that we maintain current sort of levels, then
I don't think any price hike next week would be justified.

MICHAEL TROY: Is there anything you can do about it if people don't drop prices quickly enough?

PAT WALKER: Well I think there is, certainly the transparency is important, I think brand
reputation etc.

But at the moment we're monitoring the situation. It's fair to say that generally we do see there's
a direct correlation between international benchmark and our retail prices.

I think that some stations clearly have been a little tardy on this occasion and that's
disrespectful to motorists and I hope that motorists can take their custom to the cheaper stations.

And certainly with the advent of the national FuelWatch program as I say, it will be very clear to
motorists those ones, retailers, who are passing on the benefits, that motorists will attract them
and go them and in doing so penalise any retailer that doesn't pass on wholesale savings.

MICHAEL TROY: We are in an extraordinary situation though where oil companies are actually accusing
their own customers of profiteering at this stage.

PAT WALKER: Yeah well I think that's a pleasant change in effect. I think it's interesting the
climate has changed. I say, good on you to those particular wholesalers.

I think that, there's an old saying that sunlight is a very good form of disinfectant and I think
that once we get that information, as I say, the beauty of the national FuelWatch program will be
that it'll be very obvious to everyone just what stations, what petrol stations are in fact passing
on savings to motorists.

Motorists will be able to locate them, go there, achieve their savings, at the same time reward
those people for discounting their petrol.

MICHAEL TROY: The Service Station Association though argues that it's simply part of the process.
The price cannot go down as quickly as it's gone up because of the way they purchase their
supplies.

PAT WALKER: Well it is true, it's a seven day rolling average and there is a lag time, there's no
doubt about that. But I think it's the degree of stickiness in the market if you like that is of
concern.

And it's, at this stage it does appear, as I say we've seen a five cent a litre reduction this
week. We'd anticipate at least a reduction of that order again next week, depending on what the
prices subsequently do.

But we should see trending down and in my view, as I say, I think that price hikes wouldn't be
justified at all. They're generally not justified, I should hasten to add. They are a creature of
the petrol industry. They don't reflect international price movements as such.

But I think given the sudden and rapid deceleration in the international benchmark, then it would
be appropriate for motorists to enjoy at least a week or so of no price hikes.

ELEANOR HALL: That's the petrol commissioner Pat Walker speaking to Michael Troy. And the petrol
station owners' association says its members intend to pass on the price drops as quickly as
possible.

*Editor's Note: A spokeswoman for Shell contact the program after the story went to air to say the
company was misquoted in a News Limited article and did not criticise retailers for acting too
slowly in passing on the lower cost of oil to motorists.