The Federal government announced yesterday that it would adopt Western Australia’s FuelWatch scheme nationwide. That scheme requires petrol station owners to fix their price for the day and upload that price to a centralised database. Consumers and aggregators can then draw on that information to dramatically enhance motorist’s ability to target the cheapest petrol stations.
In its petrol inquiry, the ACCC conducted an econometric analysis of WA’s scheme and demonstrated that the average petrol price in WA dropped significantly when the scheme was introduced there: of the order of 1.5 cents per litre. And this was a long term drop that didn’t seem to favour independents or majors. Put simply, it seemed that providing information stimulated competition. What is more it removed the weekly price cycle. Discounts were still there but once every couple of weeks.
As an economist, I believe that providing information to consumers is a good idea. Moreover, as a person concerned about how policy gets introduced, rolling out a scheme nationwide based on seeing what happened in one state first is very prudent. But when I discussed this approval on my blog, commentators asked: Where is the independent analysis?
Of course, the ACCC was the independent analyst here but I did wonder, can we academic economists get the data for ourselves and replicate the ACCC findings? I contacted the ACCC and was told that they could not give it to me. It was obtained under their legislative powers, not from petrol companies, but from private sources — in particular, Informed Sources. This is a company that has done a deal with petrol retailers to get them to supply price information that they then provide (and I presume charge) petrol retailers and others to access. So if I wanted the data I would have to go to them. From their site it seems that the data is not freely available. But they have been providing some reports and analysis to select academics who are now claiming to contradict the ACCC findings.
So I called up Informed Sources to see if I could get the data the ACCC actually used. However, as it was site specific, I was told that they were not permitted to provide it (although they would get back to me with a definitive answer). This is their business, so fair enough.
I think that if anyone wants to challenge the ACCC findings they need to push to make the exact data they gave to the ACCC freely available.
After all, that is precisely what the government is intending to do for future prices.
Joshua Gans is an economics professor at Melbourne Business School. For more on petrol, see his blog at Economics.com.au.
Independent fuel retailer Peter Anderson also tried to obtain the ACCC’s figures, but met only frustration. He told Crikey about it yesterday.