Tech to fight petrol stations

OPINION: The recent games played by petrol retailers in Canberra are just another example of motorists being ripped off. It's annoying enough to see large spikes in petrol prices, but what insults the intelligence of motorists the most is when they buy petrol at one location only to find that it's much cheaper at another location up the road.

Wouldn't motorists love to have access to all petrol prices in real time through their new and GPS-empowered smartphone? Wouldn't it be great if, while you were driving, your smartphone alerted you to the cheapest petrol price nearest you?

No doubt you would love that because it would empower you. You could then have a reasonable chance of finding the cheapest petrol prices at any particular location or point in time. You would no longer feel powerless against the petrol retailers. Your smartphone would find the cheapest petrol for you without you having to drive around or leave the seat of your car. It's so obvious that those interested in helping motorists would quickly jump at the suggestion. Any informed observer of the retail petrol market would know that the problem for motorists is that they are largely in the dark on petrol prices. Yes, motorists can see the price boards of those petrol stations that they drive by, but that's a tiny snapshot of the available retail petrol prices.

Any economist would tell you that there is an ''information asymmetry'' between the petrol retailers and motorists. In plain English that means that the petrol retailers generally know the prices charged by other petrol retailers, while motorists generally don't have such knowledge.

Major petrol retailers subscribe to pricing information provided by a company called ''Informed Sources.'' That company has often been of interest to the Australian Competition and Consumer Commission as it collects prices from petrol retailers and then provides that pricing information back to retailers who subscribe to its services. Significantly, petrol retailers pay a lot of money to subscribe to Informed Sources. What's more interesting, however, is that the pricing information the petrol retailers provide Informed Sources is already available electronically.

The point here is simple: if pricing information is already available electronically, why don't petrol retailers just give motorists access to prices in real time? Well, since that hasn't happened, you have to wonder if petrol retailers are happy to keep motorists in the dark. So while petrol retailers are willing to pay big money to find out the prices of their competitors through Informed Sources, they don't seem to be keen to voluntarily spend the same money putting their prices online for motorists. Would there be a cost to retailers if they chose to provide their pricing information online? Yes, there would, but remember that they already pay Informed Sources to subscribe to their services. Why don't petrol retailers simply stop subscribing to Informed Sources and use the money saved to provide their prices online for motorists?

The problem is that if only one particular retailer did provide its prices online, then the other retailers could get the value of the pricing information without having to pay Informed Sources. Economists call that the ''free rider'' problem. Free riders try to get the value of something without paying for it.

Clearly, all petrol retailers need to put their prices online for motorists to get the full benefit and to ensure a level playing field . Given that is unlikely to happen voluntarily it is up to the federal government to act.

It should move to abolish the Office of the ACCC Petrol Commissioner and just require all petrol retailers across Australia to publish all their petrol prices online in near real time.

Petrol retailers would still get the pricing information of their competitors through their respective websites, but motorists would benefit from getting immediate access to full pricing information. Surely, that is a ''win-win-win'' situation for the petrol retailers, motorists and the federal government.

Abolishing the Office of the ACCC Petrol Commissioner would save money that could be used to provide funding grants to those little petrol retailers that would need to invest in a website to publish their petrol prices online. That would be more tangible support for small business petrol retailers than the federal government's new Australian Small Business Commissioner who will have no legislative powers and no teeth. The big petrol retailers already have the necessary information technology to provide all their petrol prices on their own websites in near real time. All we now need is for the government to finally deliver on all those election promises they made to put downward pressure on petrol prices. Less talk and real action on stopping the Canberra petrol rip-off might come in handy for the government at the next election.

Frank Zumbo is an Associate Professor at UNSW's School of Business Law and Taxation. 

This opinion piece first appeared in The Canberra Times.