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Consumers yet to benefit from drop in world o -

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Consumers yet to benefit from drop in world oil prices

The World Today - Tuesday, 9 September , 2008 12:46:00

Reporter: Sara Everingham

ELEANOR HALL: A Sydney academic says Australians are paying at least 10 cents a litre too much for
petrol and has accused oil companies of failing to pass on the fall in the price of oil.

Frank Zumbo, from the University of New South Wales, is also critical of the Federal Government
saying it has failed in its promises to tackle the lack of competition among oil companies.

Sara Everingham has our report.

SARAH EVERINGHAM: Associate Professor Frank Zumbo at the University of New South Wales says he's
been watching world oil prices drop but hasn't seen a decrease in petrol prices at the pump.

FRANK ZUMBO: Well we saw oil prices go up dramatically to $147 a barrel, and as a result prices
likely went up because our prices have peaked to world oil prices. However, when prices started to
fall, world oil prices started to fall, we didn't see the rapid fall in retail prices that we
should have.

SARA EVERINGHAM: The problem Professor Zumbo says is the lack of competition among wholesalers.

FRANK ZUMBO: The Government promised that they would do something to break up the cozy club at the
wholesale level, they have not done this. And as a result, that cozy club exists at the wholesale
level.

SARA EVERINGHAM: And he says the Federal Government's FuelWatch scheme will do little to bring down
prices.

The Assistant Treasurer Chris Bowen rejects that, and says the Government is taking steps to
increase competition.

CHRIS BOWEN: Well world prices have come down, so has the Australia dollar, and you have to take
both of those factors into account, and we have seen Australian petrol prices fall. And you do see
a normal price cycle, you see that every week.

One of the things about FuelWatch is that consumers would have that information, to be able to beat
that price cycle. Associate Professor Zumbo says he opposes FuelWatch, but then the very thing
which causes some discrepancy, which is the weekly price cycle, he defends.

So there is a contradiction there which needs to be highlight.

SARA EVERINGHAM: The Chairman of the Australian Competition and Consumer Commission Graeme Samuel
says at the moment the oil companies aren't out of line on fuel prices.

GRAEME SAMUEL: I frankly have no idea where Mr Zumbo is getting his numbers from. If he were to
look at our website, he would see that we track, on a daily basis, the relationship of Australian
petrol prices to the international benchmark which is the Singapore Mogas 95 Unleaded, that is the
benchmark price that motorists, motoring organisations and almost everyone in Australia accepts is
the appropriate benchmark for setting Australian prices.

Now, the Australian prices today, as at the report that I have on my desk this morning, are 0.6 of
a cent a litre above what they ought to be. That is not a centilitre. That is 0.6 of a cent of a
litre.

SARA EVERINGHAM: It's not just oil companies that have come in for criticism. The Brisbane-based
fuel watchdog FUELtrac says airlines also aren't passing on their savings on fuel.

The FUELtrac spokesman is Geoff Trotter.

GEOFF TROTTER: The airlines have got to explain to the travelling public why it is that since crude
peaked at $US145 a barrel and it's now down to $US106 a barrel, they haven't reduced their fuel
surcharge or if they want to use jet fuel in Singapore, which peaked at $182 and is now down to
$124, why they haven't reduced their fuel charges using that as their marker.

SARA EVERINGHAM: The ACCC's Graeme Samuel has also rejected that suggestion. He says the consumer
watchdog is doing its job.

ELEANOR HALL: Sara Everingham with our report.