20th February 2002 7 cent Pump Reductions Unlikely for Ridge

Shell Australia's announcement last week was a first in Australia with a new national terminal gate pricing system. A terminal gate price is a wholesale price for bulk fuel available to anyone purchasing fuel directly from the terminal.

"This new scheme will provide simple, fair and transparent prices for Shell's wholesale fuel customers," said Ian McKenzie, Shell's General Manager - External Affairs (Oil Products).

"This is the first major reform of wholesale fuel pricing in Australia for over a decade,' Mr McKenzie said. "In most locations, Shell's new terminal gate price is five to seven cents below Shell's old wholesale list price because the discount is already built into the terminal gate price. "First the first time, all wholesale customers will be able to purchase tanker loads of petrol and diesel direct from Shell's main terminals at this discounted price. Importantly, these low capital city prices will be available to all wholesale customers including country service station operators and off-road users such as farmers.

"Shell's terminal gate price is available to customers who wish to purchase fuel on a spot basis as well as those who wish to enter into longer term contracts.

"Shell's terminal gate price is set by taking the product cost of petrol and diesel which is internationally benchmarked to ensure the most competitive price. To this base cost, a small terminal operation and administration charge is then added.

"At Shell's main terminals this charge is generally between one and two cents per litre." The NSW Service Station Association Chief Executive Officer, Kevin Hughes, has applauded the initiative taken by Shell Australia.

Whilst applauding Shell the Association has reservations about certain factors. "Transparency with the add-ons such as freight and cartage is imperative if this is to work effectively," said Mr Hughes.

A jubilant NSW Farmers Association, who have been lobbying for over a decade for terminal gate pricings, predict lower prices by up to seven cents in country areas.

The Association is calling upon the other major oil refiners to offer terminal gate pricing and to publicly list those prices for all to see.

Just how long it will be before predicted pump reductions are enjoyed by country consumers is the real question.

Will other refiners follow suit with terminal gate pricing?

If they do, will the distributors supplying the country pass on these reductions? And then, how much will be passed on by individual operators? The fuel industry has always been fiercely competitive with the consumer only the winner when price wars are waged.

Locally the prices remain unchanged with indications that there may, in fact, be an increase. This is yet another example of country dwellers being placed at a disadvantage despite their worth to both the local and state economies.