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PRICE MONITORING & REGULATION

There is an extensive range of Federal, State/Territory and Local government regulations and legislation applying to refineries and businesses operating in the downstream petroleum industry. Some of the key regulations are outlined below.

Formal Price Monitoring

On 17 December 2007, under the powers of the Trade Practice Act 1974 (section 95ZE of Part VIIA), the Assistant Treasurer and Minister for Competition and Consumer Affairs, the Hon. Chris Bowen MP directed the Australian Competition & Consumer Commission (ACCC) to monitor the prices, costs and profits of unleaded petroleum products for a period of three years and report to him by 17 December each year.

On the 22 December 2008 the ACCC released its first Formal Monitoring Report ('Monitoring of the Australian petroleum industry—report of the ACCC into the prices, costs and profits of unleaded petrol in Australia'). The Report is available for download below.

ACCC Formal Price Monitoring Report (December 2008)

Download

Regulation of Fuel Quality

The Federal Government has introduced regulation of the quality of petrol and diesel fuel in Australia. For more information on fuel quality standards see www.aip.com.au/industry/fuelquality.htm.

Oil Code Regulation

The Trade Practices (Industry Codes - Oilcode) Regulations 2006 (the Oilcode) came into effect on 1 March 2007. The Oilcode is a mandatory industry code that formed part of the Australian Government's Downstream Petroleum Reform Package. This Package also involved the passage of the Petroleum Retail Legislative Repeal Bill 2006, which repealed the Petroleum Retail Marketing Sites Act 1980 (the Sites Act) and the Petroleum Retail Marketing Franchise Sites Act 1980 (the Franchise Act).

The purpose of the Oilcode is to regulate the conduct of suppliers, distributors and retailers in the petroleum marketing industry. As a mandatory industry code, the Oilcode applies to all downstream petroleum industry participants and was designed to remove restrictions on competition, promote industry certainty, promote cultural change, and improve industry sustainability, giving all industry players the freedom to respond to changing conditions in the retail petroleum market.

Section 3(2) of the Oilcode required that a Review of the Oilcode be undertaken after it had been in operation for 12 months. The Oilcode Review was conducted by the Department of Resources, Energy and Tourism and focused on whether the Oilcode has been successful in achieving its objectives to:

• establish standard contractual terms and conditions for wholesale supplier-fuel retailer re-selling agreements for both franchise and commission agency arrangements



• introduce a nationally consistent approach to terminal gate pricing (TGP) arrangements and improve transparency in wholesale pricing and allow access for all customers, including small businesses, to petroleum products at TGP



• establish an independent, downstream petroleum Dispute Resolution Scheme (DRS) including the appointment of a Dispute Resolution Adviser (DRA) to provide the industry with a cost-effective alternative to taking action in the courts.

After the Oilcode Review had commenced, the Australian Government also asked for the Review to examine the appropriateness of the arrangements for TGP publication. This direction stemmed from the Government’s response to the Australian Competition and Consumer Commission’s (ACCC) December 2007 report, Petrol Prices and Australian Consumers – report of the ACCC inquiry into the price of unleaded petrol.

The Department commenced the Oilcode Review in March 2008. Interested parties were invited to provide submissions to the Department in relation to issues that were raised in the Oilcode Review Issues Paper.

AIP's two submissions to the Review are available from the links below.

Submission to Review of Trade Practices (Industry Codes – Oilcode) Regulations 2006	Download
– Supplementary Submission (May 2008)	Download

The Minister for Resources and Energy released the Oilcode Review report on 24 August 2009. A copy of Oil Code Review Report is available for download below.

Oil Code Review Report

Download

The Review concludes that the Oilcode has met its key objectives and that the current arrangements for TGP publication are appropriate. The Review also makes 11 recommendations to increase disclosure obligations, further clarify the dispute resolution scheme, examine options for amalgamating the procurement process for the dispute resolution services and conduct another review in three years time. The Government will consider the review’s recommendations in consultation with interested parties before finalising its response.

Other Government Regulation

In addition to the Formal Price Monitoring, Oilcode and Fuel Quality Standards regulations noted above, there are also a range of Federal, State/Territory and local government regulations and legislation applying to refineries and businesses operating in the Downstream petroleum industry.

These regulations include, for example:

• major hazard facility regulations
• regulations related to the transport, storage and handling of dangerous goods (eg. ADG7)
• a range of environmental regulations related to:
• refinery production (eg. flaring)
• regulation of service station equipment and management of retail petroleum sites, including:
• Regulation of Underground Petroleum Storage Systems (UPSS)
• Regulation of vapour recovery
• Regulation of trade measurement
• monitoring of ground-water and ground-level concentrations (eg. leak detection)
• air pollution and urban air quality
• wastewater management and recycling
• site assessment, prevention and remediation (eg. remediating contaminated soil and water)
• waste oil and product collection, recycling and disposal
• collection and recycling of plastic containers (eg. Packaging Covenant)
• planning, approval and license requirements for new and expanded facilities and infrastructure
• energy efficiency requirements
• a range of worksafe and OH&S regulations.