Study: Companies "profiteering" with slow petrol price declines

What goes up must come down, the old saying goes, but according to a new study by from the University of New South Wales into petrol prices, it may not be at the same pace.

The investigation, headed by Professor Frank Zumbo, found that while prices at the pump undergo "almost instantaneous" rises if the price of oil goes up, there is a "significant time lag" in passing on the declines when it falls, the Daily Telegraph states.

Professor Zumbo said the lag "cannot be explained" and, the newspaper states, he accused oil companies and petrol retailers of "blatant profiteering" by being slow to react in bringing prices down.

On July 29th, average petrol prices in Sydney declined two per cent to $1.53 a litre but Professor Zumbo said if they reflected the worldwide oil market, they should be as low as $1.40 a litre.

His comments follow those made last week by the president of the National Roads and Motorists Association, Alan Evans, who said petrol prices should currently average $1.35 a litre, the newspaper said.

Speaking on ABC News, Mr Evans added there are wide variations in different retailers' prices - and sometimes different stations on the same street - that "just shouldn't happen" but retailers know they have a "captive" customer base, particularly in cities like Canberra where there are few alternatives for filling up.

Professor Zumbo also dismissed the lag period some analysts use to explain the slow pace of petrol price falls as "over-rated". They argue it takes seven to ten days for changes in the global oil price to filter through to prices at the pump, but Professor Zumbo pointed out the delay does not appear to apply when prices are rising.

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