The Miles government has put forward an ambitious list of election proposals aimed at reducing the price of petrol in Queensland.
If re-elected in October, Labor will follow the lead of the West Australian government in demanding petrol stations release fuel prices a day in advance.
On the advice of the RACQ, Premier Steven Miles has promised he would legislate to cap petrol price rises to 5 cents a litre per day.
But in a move that appears to have caught even the RACQ by surprise, he's vowed to go one step further and establish 12 state-owned petrol stations.
Mr Miles admits there are many questions that are yet to be addressed and opinions vary on whether these measures will have the desired effect.
Why are petrol prices higher in Queensland?
The RACQ believes there are two major factors – the length of the fuel price cycle and a comparative lack of independent retailers in the fuel market, meaning less competition.
RACQ chief executive David Carter says south-east Queensland has a 38-day fuel price cycle — longer than anywhere else in Australia.
"South-east Queensland motorists in particular are paying the highest prices for fuel in Australia of any capital city," he says.
"If we can shorten the duration of the fuel cycle and encourage greater competition, people will pay less for their fuel than they currently pay."
Australasian Convenience and Petroleum Marketers Association (ACPMA) chief executive Mark McKenzie agrees fuel is generally more expensive in the sunshine state.
"What we've seen since about 2009 is the Brisbane average petrol price has been consistently higher than the other four major capitals — Perth, Adelaide, Sydney and Melbourne," he says.
"That's a largely historical factor that's due to the fact that we don't have as many larger, independent competitors operating in the market."
Will announcing next-day price rises make a difference?
RACQ fuel affordability expert Dr Ian Jeffreys says Perth's experience shows it will.
Perth enjoys a seven-day fuel price cycle and this is largely due to retailers having to flag the next day's fuel price.
"When we look at the evidence from around Australia or from overseas, it's those weekly or fortnightly cycles that are the most competitive and deliver the lowest prices for consumers," Dr Jeffreys says.
He believes capping those daily rises to 5 cents a litre will likewise keep prices down.
"At the moment, when a petrol station increases their prices they will jump up by about 50 to 55 cents a litre [in Queensland]."
Could capping price rises just make the average fuel price higher?
Mark McKenzie thinks so.
"If you cap increases, you also cap decreases that occur in the price cycle," he says.
"As a result, what we would expect is to see the average petrol price rise over time."
But Dr Jefferies disagrees. He says it all comes down to the duration of the price cycle.
"On the discounting phase, when retailers are slowly discounting their prices, it's competition between retailers that starts to kick in and leads to that slow reduction in prices.
"We would expect a similar mechanism will continue under this regime, but what it will lead to is instead of having a 38-day cycle — only having those nine opportunities per year to buy cheap petrol — we're likely to see a return of either weekly or fortnightly cycles."
Earlier this year, Queensland's Treasurer Cameron Dick suggested capping prices was not within the state's powers.
"The state doesn't have the legislative or constitutional authority to regulate prices," Mr Dick said on June 7.
But he now says the Labor government is "seeking a mandate from the people to introduce laws to enable us to do that".
Mr Dick said on Tuesday state legislation will get it done and won't require any federal intervention.
What's being done to increase competition?
If re-elected, Mr Miles says his government will use planning call-in powers and government-owned land to make more sites available for independent fuel retailers.
"The energy minister has been in discussions with fuel retailers. What we've said is we will work particularly with those independent retailers to determine what they need to get into our market," Mr Miles says.
"But where we are unable to facilitate them getting into our market, that's where we will step in."
Will state-owned petrol stations make a difference?
Mr Miles thinks they will.
"We have long supported public ownership as a method of intervention to drive prices down. That's what we have done in the electricity market very successfully," he says.
"We believe there is a role, particularly with an essential service and where there is a market failure, for us to use our government-owned corporations to deliver lower prices, more competition, and price certainty to Queenslanders."
Dr Jeffries says the RACQ has no modelling to back up that claim.
And Mr Miles admits the government is yet to put flesh on the bones.
Asked who would run state-owned petrol stations, he replies: "That would depend on the operating model, which is yet to be determined."
Mr McKenzie says the government is proposing to enter a very complex retail environment "with no knowledge of the market".
"There's no evidence in Australia of state-owned petrol stations operating at all, so whether they work or not is just unclear," he says.
"You really have to question whether a government has the capacity or the capability to run an operation like that.
"And certainly if you're talking about a 20-year problem, you really have to question why this solution has come to the table at such a late hour in the current span of this government."
Mr McKenzie also argues that adding 12 state-owned petrol stations to nearly 1,400 existing fuel outlets in Queensland would increase market competition by "less than 0.7 per cent".
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