Oil Companies make an extra 3.4 billion dollars during the high fuel price cycle?
I’m continually angry at the lack of attention by the ACCC, various State Governments and consumers at large with regards the fuel price rises.
The fuel price rises are ridiculous, to say the least, and almost criminal at worst. Have you ever stopped to calculate the profit margin the large oil companies make when they vary the fuel price upwards?
The Australian Bureau of Statistics (ABS) maintain there are 19.2 million vehicles on the road in Australia. Of that diesel-powered vehicle constitute 23.4% or around 4.5 million vehicles.
So, in essence, there are 14.7 million petrol-powered vehicles driving on Australian roads. Let’s assume for a moment that every one of these vehicles has a 60-litre fuel tank and fills up once every 10 days. Of course, there are vehicles (ride-share vehicles, company and government vehicles and more) which would use much more than that but for the sake of the exercise, I’m comfortable with this number.
Now, let’s agree on one thing. Petrol companies DO NOT LOSE money when they sell fuel at low prices. Granted the retailer doesn’t have as much of a margin and arguably with discounted wholesale prices the oil companies aren’t making as many $$, but forgive me for being sceptical, but when they the fuel price rises as they have recently at least in Queensland if not the whole nations, they stand to make a whole lot more profit.
So the Australian non-diesel vehicle fleet of 14,700,000 vehicles use 955,500,000 litres of fuel every 10 days. When the oil companies raise that price by 20c a litre they make another $191,100,000. Yep – nearly 200 million dollars every 10 days. So if you consider the high/low cycle of petrol prices, every high cycle the oil companies are making almost 200 million dollars more than on the low cycle. Let’s then assume that there are as many high cycles every 10 days as there are low cycles. So every year there are about 18 high cycles for the oil companies. That equates to $3,439,800,000 – over 3.4 billion dollars.
I’ve spent the last forty years immersed in the automotive industry from salesman to the owner of a 7 brand multi-franchise dealership and now as a Car Broker and commentator on the industry. I know cars.
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