The Australian Institute of Petroleum today released its annual survey of oil industry profitability that confirmed the refiner-marketer oil companies made an underlying loss making and selling petroleum products in 2000.
The 2000 Ernst & Young Downstream Oil Industry Financial Survey that covers the Australian refining and marketing operations of the four major petroleum companies BP, Caltex, Shell and Mobil, confirms the serious financial position of the industry.
The bottom line is the industry reported an underlying loss of $160 million in 2000.
Mr Bryan Nye, Executive Director of AIP, said, "This translates to a loss on every litre of petroleum product sold. This type of result is obviously unsustainable."
"The 2000 Survey reinforces the fact that industry restructuring is needed to allow the local refining companies to compete effectively, particularly with imports," Mr Nye added.
This result was against the backdrop of petrol prices hitting $1 a litre for the first time in 2000 and the issue becoming a political football. "A lot of people attempted to make political mileage out of this issue but the facts speak for themselves", Mr Nye said.
"This is one of the most competitive industries in Australia and petrol consumers are directly benefiting."
The Australian oil industry continues to deliver the lowest pre-tax petrol prices in the developed world. The 2000 Ernst and Young Survey shows that Australian pre-tax petrol prices were again the lowest in the OECD in the fourth quarter of 2000. Petrol prices were the fifth lowest on a tax-inclusive basis, behind only the USA, New Zealand, Mexico and Canada.
Other outcomes of the survey, conducted independently by Ernst & Young, include:
- The marketing part of the industry returned a profit of $24 million or 0.1% of gross sales revenue, continued evidence of the high competition and low margins in the retail part of the downstream petroleum business.
- The refining part of the industry made an underlying loss of $184 million largely as a result of low refining margins including periods when margins were actually negative.
The full 2000 Ernst and Young Downstream Oil Industry Financial Survey is available on the AIP website at www.aip.com.au.