Why is fuel pricier in the country?

Country Fuel Country Fuel

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.

2. Diesel and LPG Fuel Markets

Similar higher prices occur in regional NSW for Diesel and LPG fuel. While there is no price cycle behaviour in these two fuel markets, the lack of independent competition is still the key factor.

Here's how we can help: use the my nrma app

In August 2016, the NRMA successfully lobbied the NSW Government to make real time fuel prices available to the public. If you're an NRMA Member, you can access NSW prices on the my nrma app. This tool can be extremely valuable in the lead up to long weekends when you're travelling across the state. Depending on the timing of price cycles in Sydney the Central Coast, Newcastle and Wollongong the difference in prices can save you as much as 30 cents a litre.

While real-time fuel pricing is currently only available to the public in NSW, the NRMA is working with the ACT Government to adopt policies that will allow motorists in the ACT to have the same opportunity to save money at the bowser.

It certainly pays to use the my nrma app to find the cheapest fuel in your neighbourhood or when travelling through regional NSW.


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