Refinery Exchange Agreements: Pro-Competitive, Anti-Competitive or Benign?

This study examines the impact of the termination of refinery exchange agreements on retail petrol prices in Melbourne and Sydney in July 2002. This is done using autoregressive integrated moving average methodology coupled with intervention analysis using average weekly retail petrol price data. It is found the termination of refinery exchange agreements was associated with an increase in relative retail petrol prices. It is concluded that refinery exchange agreements were pro-competitive, leading to relatively lower retail petrol prices for consumers arising from reduced transaction costs.