Fuel retailers face $100 million fines for using Middle East conflict to price gouge consumers

Oil companies and petrol retailers that use the Middle East conflict to price gouge motorists are facing $100 million fines with the competition regulator stepping up its monitoring of unusual price spikes coinciding with panic buying.

Treasurer Jim Chalmers and Energy Minister Chris Bowen on Wednesday announced beefed up surveillance of the fuel sector with capital city unleaded prices now creeping closer to $2.30 a litre, as farmers struggle to obtain diesel typically selling for more than $2.50 a litre.

The new $100 million maximum fine, per offence, for false or misleading conduct or cartel behaviour amounts to a doubling of the existing penalty and is designed to boost supply of fuel at service stations, with regional areas in dire need.

“The conflict overseas shouldn’t be an excuse to profit off Australians,” the ministers said.

“We’re putting petrol companies on notice. We won’t cop big corporates treating Australian consumers like mugs.”

The Federal government on Wednesday announced tough new measures a day after meeting representatives of the Australian Institute of Petroleum, the Australasian Convenience and Petroleum Marketers Association, the Australian Trucking Association and the National Farmers Federation.

The Australian Competition and Consumer Commission has also been given extra resources to monitor unusual petrol price spikes. Capital city motorists are now paying more than $2.20 a litre on average for unleaded, after crude oil prices this week hit $US120 a barrel before retreating on Wednesday back to $US85 a barrel.

“We are closely watching market behaviour and if there is conduct that is collusive or misleading or deceptive, we will investigate it and take action where appropriate,” ACCC Commissioner Anna Brakey said.

Australia also faces a potential milk shortage too. Dairy farmers report they have just days of diesel left and are unable to secure new bulk supplies from diesel wholesalers to power generators and tractors.

Joe Bradley, a 70-year-old farmer with 400 head of dairy cattle at Dayboro north of Brisbane, said his local independent diesel supplier told him this morning she was unable to help, despite his farm having just four to five days’ worth of fuel.

“I don’t know how we operate without tractors. You can’t feed the cows. I’ve never been in that situation before,” he told The Nightly on Wednesday.

“Farmers are going to be up shit creek, basically. It’s a worry. I don’t know what’s going to happen. It’s a crazy situation.

“It’s the unknown. It’s scary. Things have changed very quickly. It’s getting critical.”

Oil companies are prioritising larger customers with contracts instead of those who supply diesel to farmers when they need it, giving first preference to the larger service station retailers, he said as a board member of eastAUSmilk who has also been a dairy farmer for 54 years.

“The small, independent fuel operators who most of the rural farmers get their supplies through, are being pushed down the list and they’re not being told when they’re going to get fuel,” Mr Bradley said.

“In other words, they’re supplying the big guys who have the contract and they’re not worried about the farmers who buy fuel as they need it.”

Mr Bradley, whose Oakleigh Farm supplies Maleny Dairies, has also been receiving phone calls from dairy farmers in Queensland’s Sunshine Coast and Scenic Rim about being unable to secure new supplies of diesel.

The fuel is essential for milking cows twice a day, and some farmers are considering desperate measures like filling up jerrycans at their local service station.

“We’re going to have to try to maybe fill up some 20-litre cans and go to a service station and bring it back and try to put that in the tractor to keep it going,” he said.

The Australian Institute of Petroleum, which represents the likes of Ampol, BP, Mobil Oil Australia and Viva Energy, said a shortage of fuel meant priority had to be given to regular contract customers at a wholesale level.

“Those customers include bulk fuel purchasers such as trucking businesses, major agricultural businesses, fuel wholesalers as well as retailers,” chief executive Malcolm Roberts told The Nightly.

“The key point is whether the customer has a contract, not their type of business. There is no discrimination between different businesses - just who has the right to supply via contract.”

Rural Fuel Supplies, a family business which delivers diesel to farmers in southern Queensland including Mr Bradley, has been struggling to fill the backlog of wholesale orders since the Middle East conflict escalated during the past 11 days.

“We haven’t necessarily been turning anybody away, no, we’ve just been very transparent with the information that we’ve been provided,” owner Rebecca Young told The Nightly.

“We’re definitely not saying ‘no’, we’re just saying ‘not now’.

“We have a massive backlog of orders, obviously, when everything started to go down the toilet, a lot of people were calling as we’re just a very small family business so we’re definitely trying our best to get to everybody but unfortunately in these tough times, it’s very unknown.”

Farmers are going to be up shit creek

Federal Transport Minister Catherine King acknowledged there was a diesel shortage in the regions “with demand doubling and even tripling in some areas” as a result of panic buying at service stations.

“I know, however, that Australians are concerned that a significant increase in demand for diesel has seen shortages, particularly in some regional communities,” she told Parliament on Wednesday.

But Mr Bowen, who met with the National Farmers Federation on Tuesday for a roundtable on fuel supply, denied a Question Time suggestion from West Australian Liberal MP Melissa Price about farmers being unable to obtain fuel from their wholesale distributor.

“Not only did I say and do I say that Australia’s fuel supply is secure — every honourable member should say that, Mr Speaker, because that’s the truth and that’s the responsible truth to tell the Australian people,” he said.

“In the last 10 days, Mr Speaker, fuel supplies have arrived in Australia in Townsville, in Brisbane, in Cairns, in Broome, in Geelong, Kwinana, Gladstone and Mackay.

“At the same time, we have acknowledged that we are facing supply chain issues in regional Australia in particular.”

Mike Kaiser, the secretary of the Department of Climate Change, Energy and Water, has been tasked with seeking more information about fuel distribution, under Section 13 E of the Petroleum and Other Fuels Reporting Act.

“I’ve asked the secretary of my department to exercise the powers available to him to - to seek additional information about supply and demand at the fuel distribution terminals around Australia,” Mr Bowen said, adding chief executives of fuel distributors had told him “supply continues to flow as would be expected”.

The Department of Climate Change, Energy and Water is this week meeting with agricultural and freight transport groups to discuss supply chain problems, especially in regional areas.

The Nightly asked the offices of Ms King and Mr Bowen whether they were considering a policy of quarantining diesel supplies for farmers.