In a partially regulated market you need regulation to protect competition. You cannot just set up in business, where you want, however you want. There are regulations covering everything from product quality to zoning to occupational health and safety.
The so called ‘free’ market is understandably a myth because it is not ‘free’. As such it lends itself to those who have the economies of scale, delivered to them over time, to exclude or rid themselves of new or smaller participants – while, at the same time, dealing with regulation overheads, framed as a public benefit which but exclude true, free entry and participation in the market. If there is any doubt set up a fuel bowser at the front of your house, buy some ethanol blended fuel to sell and count to ten.
Because this is fact in the oil market and because it is a role of government to deliver to people the highest level of freedom possible then it should be the role of government to ensure a wider participation in the retailing of fuel and the freedom to enter and remain in the market, in a viable way.
The argument that the Oilcode delivers a more competitive market is wrong. At the end of this process the controller and owner of the oil well site will, by associated entities, own the transportation, the refining, the wholesaling and the retailing – i.e., complete vertical integration. I cannot see how that increases competition and cannot believe that the holder of that market position would not exploit it for the benefit of their shareholders’ return on capital.
If a multinational company trades with its foremost goal being the benefaction of other participants in the market and the lowest overall return on its product, it will be a first and you will be able to deliver a whole new chapter in economic theory to the University of your choice.
What has happened in the UK will be the result here in Australia. That will be the removal of independents and franchisees and the closure of smaller regional fuel outlets. I do believe that the government should legislate to protect the freedom of the small business retailer.
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