Tim O'Brien | Jun 10, 2008

Persistent whispers from the ol' rumour mill suggest that Mobil is preparing to pull up stumps with its Australian refining operations.

Mobil is part of ExxonMobil, a brand that holds the trophy for ‘best ever’ effort in oil spills after the Exxon Valdez struck a bottle of cheap plonk off the coast of Alaska (it had earlier been lurking in the Captain’s cabin) twenty odd years ago.

That little spot of maritime carelessness aside, Mobil operates the Altona refinery, Yarraville terminal, and has its Adelaide refinery in mothballs.

Apparently the Altona operation needs the roof fixed, a spot of re-stumping, a lick of paint and a bit of plumbing attended to, which Mobil is reluctant to do; preferring to load the trailer up, put the keys under the mat and exit stage left.

Two things will happen if Mobil goes: it will further concentrate the wholesale market into the hands of Caltex and Shell who also have most of the retail market sewn up (there’s this little thing called ‘vertical integration’); and it will mean more imported petroleum product.

Lessee now, what’s wrong with a further concentration of the market?

First, there's not an oil company on the planet that wouldn't send your Granny to the knackery if they thought they could make a dollar out of it (and that was just a day’s work last week, this week they’re coming around to break your kids toys). So giving them more of the market, with reduced competition (not that there’s much of that around in petrol retailing), will have them with their hands even deeper in your pockets (‘Coz what choice have you got?).

Secondly, besides the downside of more imports of petrol and diesel (and its effect on balance of payments, flowing through to interest rates) it reduces Australia’s energy security.

And that’s just whisper number one.

Whisper number two is suggesting that Wesfarmers—who wrestled Coles to the floor after a bit of extended scratching and biting—is preparing to put its Shell outlets out with the hard rubbish collection next time it’s coming up their street, or whenever it can find a buyer (whichever is the sooner).

Now while even your daft Uncle Robert knows that the ‘savings’ with the shopper-docket stuff is all done with mirrors (like, duh, you’re paying for it somewhere brothers and sisters), the sale of the Shell outlets will present a problem for the market: where will a buyer big enough to afford them come from? Not independents like Liberty or United—they’re nowhere near big enough. So who’s left... BP? Caltex? Would the ACCC wear it?

Ah, just when you thought it couldn’t get any more painful at the pump!

Yes, friends, what with crude expected to bust through $150USD a barrel by July, and a market here sewn up top-to-bottom, the bleeding is set to continue. Not much of a surprise though, is it?