Drivers in rural and regional areas must contend with long distances. Yet, they often pay more for fuel than city people. So, what's behind the price gap?
1. Unleaded Fuel Markets
Unleaded fuel prices in regional NSW towns tend to about five to seven cents a litre more expensive on average than in Sydney. The prime reason for this is a lack of competition, particularly independent retailers. Independents have a much greater presence in the Sydney, Central Coast, Newcastle and Wollongong fuel markets. While there are some independent operators in some regional towns that offer cheaper fuel, their presence isn't as dominant as it is in the city. It’s a similar story in Canberra; remarkably, only five of 58 retail sites in the Capital are independent operators.
What's more, petrol prices in regional NSW change more slowly than in a metro area - both up and down - because retailers in many regional areas tend to have lower stock turnover than in the city. Regional fuel retailers may not sell their fuel stocks as quickly as city retailers, so when there is any change in the international benchmark and wholesale prices of fuel it generally takes longer to impact on country retail prices. This means that while prices in regional areas might fall slowly, they also tend to rise more slowly.
The graph below shows the daily average unleaded price movements in Sydney, Canberra and regional NSW fuel markets.