Diesel exhaust fluid AdBlue surges in price, but is it price-gouging or just supply and demand?

The consumer watchdog is investigating whether price gouging is occurring in the market for AdBlue, an anti-pollutant added to most modern diesel engines, after the federal government called it in to monitor.

Key points:

  • AdBlue prices have quadrupled in parts of Australia
  • The ACCC says it can name and shame suppliers engaging in unconscionable conduct
  • One industry insider says the price rises are simply down to the laws of supply and demand

AdBlue has surged significantly in price amid a shortage of refined urea, a key ingredient used in the diesel exhaust fluid.

The shortage is also part of a global supply chain crisis — multiple producers of urea across the globe have either shut down, are in maintenance, or have been directed by their governments to focus on domestic markets.

It has sparked a scare among truck drivers and the transport industry, who fear a lack of AdBlue could cripple the transport networks that provide daily consumer goods to Australians.

The federal government recently stuck a deal with fertiliser manufacturer Incitec Pivot to significantly increase the local production of urea to salvage the situation.

But even that didn't seem to stop AdBlue prices from surging.

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Usually, AdBlue prices range from around 60 cents to $1.50 per litre, depending on the package size and other commercial terms.

AUSBlue, the country's largest AdBlue supplier, is currently selling it for around $1.50 to $2.50 per litre, according to the company.

But AdBlue prices have quadrupled in parts of Australia, and some industry insiders have reported retail prices as high as $8.50 per litre.

The national milk haulage company SRH Milk Haulage previously told the ABC that "price gouging" was happening.

The Australian Competition and Consumer Commission (ACCC) noted that "while price gouging is generally not illegal, if a business makes misleading claims about the reason for price increases, it will be breaching the Australian Consumer Law."

It told ABC News it would "investigate any evidence of price collusion in the AdBlue market and take appropriate action.

"The ACCC can publicly call out any suppliers of AdBlue which seem to be exploiting the national shortage," a spokesperson said.

"Under the Competition and Consumer Act excessive pricing may, in certain circumstances, constitute unconscionable conduct. Any such cases would need to be ultimately decided by a court."

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Any official crackdown on price gouging of AdBlue is unlikely to happen any time soon, as it can take months for the ACCC to gather evidence and pursue legal action if any unconscionable conduct or price-fixing behaviour is found.

Some AdBlue suppliers argue there isn't price gouging in the AdBlue market.

Simon Henry, chief executive of DGL Group, AUSBlue's parent company, said when a commodity goes up 400 per cent in a few weeks, the government and the ACCC examine that to "make sure it's not being manipulated".

But he said, when it comes to the AdBlue market, "we're simply talking about supply and demand".

"You've got more demand than supply and naturally the price will go up," he said.

"If you were to artificially keep the price down, then you could exacerbate the problem through people burning more or putting less thought into their trips and whether they actually need it or not."

Mr Henry said the price of urea had also gone up significantly.

"Urea is tied to the price of oil … if the price of oil goes up, the price of urea goes up," he said.

"The price of urea that we've been buying and been quoted is up to three times what we have historically paid."

"So at one stage you might have been paying $US650 a tonne, we are getting quoted $US2,000 a tonne now."

The competition watchdog says anyone with evidence of price gouging can contact the ACCC anonymously.

Source: https://www.abc.net.au/news

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