No Winners in Withdrawal of Petroleum Industry Reform Package

The oil industry is extremely disappointed that the Government has found it necessary to withdraw the petroleum industry reform package. This withdrawal is the result of the failure by the Motor Trades Association of Australia (MTAA) to accept a key element of the Government’s reform package. By undermining the reform package, the MTAA has demonstrated that it is out of touch with the needs of consumers and the realities of the service station sector.

The reform package, which followed the comprehensive reviews of the petroleum products industry by the ACCC, offered a better deal for oil industry participants, including the small business sector, and benefits for consumers through increased industry competition.

Jim Starkey, Executive Director of the Australian Institute of Petroleum said that "since the announcement of the Government’s reform package, the oil companies have met all their obligations. The companies have also responded constructively to the concerns of other industry participants by offering substantial concessions including in the development of the new Oilcode and on issues such as service station operators’ access to competitively priced fuel.

"Repeal of the Sites Act would allow the oil companies to compete on equal terms with other companies marketing petroleum products and to structure their franchise businesses in the most competitive way to meet the requirements of the market. Each company gave written undertakings, to the Senate and to the Government, on the future structure of their businesses".

Despite the significant benefits for all industry participants, the MTAA has refused to agree a key element of the reform package — repeal of the Sites Act — in any circumstances.

Withdrawal of the reform package means losses all round:

• the oil companies, constrained by outdated inefficient legislation, will be unable to operate their networks on a sound business basis;
• the viability of the oil companies’ franchise networks — a significant small business sector — is now threatened;
  • the concerns of resellers will not be met; and
  • the prospect of a better deal for consumers, particularly in country areas, offered by the reform package would also be lost.

Restructuring and reform of the petroleum products is necessary to achieve a more efficient and competitive industry. The MTAA opposition to a key element of the Government’s repeal package means that the companies must explore other options.