Hello and welcome to the November 2006 issue of the MotorMouth Newsletter.

Over recent months, the Senate Economics Committee in Canberra has been conducting an Inquiry into the price of petrol in Australia. Their report is due out by the end of November.

If you are interested in reading some of the submissions put forward, go to
http://www.aph.gov.au/senate/committee/economics_ctte/petrol_price/submissions/sublist.htm

From time to time, we get enquiries from motorists on issues such as the number of refineries in Australia and the level of fuel imports. The following is an extract from a submission made by the Australian Competition and Consumer Commission to the Inquiry in July 2006.

“Refining

There are four integrated refiners/marketers operating refineries in Australia.

These are: BP, Caltex, Mobil and Shell. BP, Caltex and Shell operate two refineries each and Mobil operates one. The refineries are distributed across the mainland states. The total capacity of the seven refineries is 42 970 million litres per annum and they produce petrol, diesel, jet fuel, fuel oil, liquefied petroleum gas, lube oils, bitumen and other products.

In 2004-05 Australian refineries produced 17 668 million litres of petrol. This represented around 41 per cent of the total output from Australian refineries. Australian motorists consumed 19 876 million litres of petrol in 2004–05.

The location and capacity of the refineries in Australia are shown in table 3.1.

Most of the refineries in Australia were generally constructed in the 1950s and 1960s and are old by international standards. They are also relatively small. The combined capacity of the seven refineries in Australia is less than the capacity of some individual refineries in the Asia–Pacific region. For example, the SK Corporation refinery in South Korea has an annual capacity of 47 415 million litres per annum.

Refining capacity in Australia has declined over recent years. In 2003 the total annual refining capacity was 50 750 million litres. Between 2003 and 2005 refining capacity in Australia reduced by around 15 per cent. This decline has been due to the ‘mothballing’ of Mobil’s Port Stanvac refinery in South Australia and a reduction in capacity at other refineries as they re-configure to meet the Australian fuel standards progressively introduced from January 2002.

Table 3.1 Location and capacity of Australian refineries

On 1 July 2003, Mobil ceased production at its Port Stanvac refinery in South Australia (which had a capacity of 4 520 million litres per annum). When it announced the closure of Port Stanvac, Mobil commented that the Adelaide refinery was one of the smallest refineries in the Asia–Pacific region and under the current market conditions could not compete with the much larger regional refineries that can produce petroleum products at a lower cost. However, Mobil proposed to maintain the refinery in a condition that would allow a restart should viable operations be sustainable in the future.

Crude oil

In 2004–05 around 65 per cent of the crude oil used in Australian refineries was imported. The main sources of imports were Vietnam, Malaysia, Indonesia, Saudi Arabia, the United Arab Emirates, Papua New Guinea and Brunei. Imports from these countries represented 88 per cent of total imports of crude oil.

Although Australia has substantial crude oil production, it tends not to be the type of crude oil needed to produce the product mix of Australian refineries. Australian crude oil tends to be lighter and sweeter than most world crude oils which leads to generally higher prices for Australian crude oil.

Different crude oils have different inherent yields of products and therefore refineries will use the types of crude oil that closely matches the range of products they produce. Australian crude oil does not exactly match the refined products demanded in Australia, which requires heavier crude oils for some products.

While Australian refineries could be re-configured to use Australian crude oil, this would be inefficient in that it would lead to higher costs of production and lower output. It would also put Australian refineries at a competitive disadvantage compared with refineries in the Asia–Pacific region.

Imports and exports

The recent reduction in Australian refining capacity has meant that existing demand for petrol cannot be met solely from domestic production.

In 2004–05 3 166 million litres of petrol was imported into Australia. The major source of imports was Singapore (2 754 million litres, which represented 87 per cent of total imports). Imports represented 16 per cent of total petrol consumption in Australia in 2004–05.

The level of imports has been growing. In 2002–03 imports were around 1 686 million litres, which represented around 9 per cent of total petrol consumption.

Some of the imported product is supplied to northern and north–western areas of Australia, where domestic refineries are generally unable to competitively supply product.
The refiner/marketers and some independent operators import fuel into Australia. Most imports are by the refiner/marketers. Independent importers in the past have included Trafigura in New South Wales and Victoria, Gull in Western Australia and Neumann Petroleum in Queensland. However, they are not regular importers and they source most of their product from the refiner/marketers in Australia.

In 2004–05, 771 million litres of petrol were exported. The major destination was New Zealand (732 million litres, which represented 95 per cent of total exports).”

Note:
This extract has been reproduced under licence from the ACCC and can not be reproduced without their written approval.

Full details of their submission can be found at:
http://www.aph.gov.au/senate/committee/economics_ctte/petrol_price/submissions/sub31.pdf

Until next month...

Alan Price
Marketing Manager - MotorMouth
apricemotormouth.com.au

This month's winner is Judith from Glen Alpine in NSW. Judith's entry - Always Check "When paying for petrol with a shopper docket, check and make sure that the discount price has been deducted. The cashier is often so quick to move onto the next person, that the discount has not been deducted. It has happened!" Congratulations Judith! Your prize will be sent out to you shortly.

EMAIL IN AND WIN!

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So what are you waiting for? Send through your contribution. Remember to add your name, address and phone number to your entry so we can notify you if you are chosen as our winner and send you your prize. Please note, only users who are signed up to receive the MotorMouth Newsletter can win the competition.

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The average, lowest and the highest Unleaded prices for October 2006 in each city were:

The price leading service stations for Unleaded in each city in October 2006 were:

Brisbane	Service Station Mobil Address corner Gympie Road and Brickfield Road Suburb Aspley Average Price for month 98.9
Sydney	Service Station Speedway Address corner Wellington Road and Cumberland Road Suburb Auburn Average Price for month 111.4
Melbourne	Service Station Liberty Address corner Heatherton Road and Hooker Avenue Suburb Springvale Average Price for month 114.3
Adelaide	Service Station Southern Cross Address corner O.G. Road and Yaralin Avenue Suburb Klemzig Average Price for month 110.3
Perth	Service Station Caltex/Woolworths Address corner Armherst Road and Nicholsons Road Suburb Canning Vale Average Price for month 112.9

The average, lowest and the highest Diesel prices for October 2006 in each city were:

The price leading service stations for Diesel in each city in October 2006 were:

Brisbane	Service Station Caltex/Woolworths Address corner Mt Lindsay Highway and Browns Plains Road Suburb Browns Plains Average Price for month 115.7
Sydney	Service Station Volume Plus Address corner Terminus Street and Carey Street Suburb Liverpool Average Price for month 122.0
Melbourne	Service Station Liberty Address Moorooduc Highway Suburb Moorooduc Average Price for month 121.0
Adelaide	Service Station Southern Cross Address corner O.G. Road and Yaralin Avenue Suburb Klemzig Average Price for month 123.2
Perth	Service Station Yule-Du Roadhouse Address Albany Highway Suburb Bedfordale Average Price for month 124.0

The average, lowest and the highest LPG prices for October 2006 in each city were:

The price leading service stations for LPG in each city in October 2006 were:

Brisbane	Service Station Caltex/Woolworths Address corner Toombul Road and St. Vincents Road Suburb Virginia Average Price for month 49.5
Sydney	Service Station Gogas Address corner Forest Road and Frederick Street Suburb Bexley Average Price for month 47.8
Melbourne	Service Station Caltex Address corner Somerton Road and Somerton Park Drive Suburb CampbellField Average Price for month 46.9
Adelaide	Service Station Caltex/Woolworths Address Port Road Suburb Woodville Average Price for month 51.9
Perth	Service Station Caltex Address corner Joondalup Drive and Cord Street Suburb Joondalup Average Price for month 52.1

MotorMouth is committed to helping Australian motorists get a better deal on fuel by providing them with free and easily accessible information on fuel prices.

Reproduction of the whole or part of this email constitutes an infringement of copyright. All information published in this email is intended to be used for your personal use only and can not be used for commercial use without the prior written consent of MotorMouth Pty Ltd. For data sales enquiries please contact salesmotormouth.com.au