Mount Isa's One Day Price War Took Unleaded to 225.9 While the Majors Held 255.9

Mount Isa's One Day Price War Took Unleaded to 225.9 While the Majors Held 255.9

Economists have a rule called the law of one price. When two shops in the same town sell the same thing, buyers drift to the cheaper one until the prices meet. Mount Isa is a good test of that rule right now. At 8:15am AEDT on Monday 26th Oct 2026, its servos were selling the same unleaded petrol at two prices 19.4 cents apart. So why hasn't the gap closed? Let me explain.

Two prices in one town

Astron Mount Isa on Camooweal Street and Solo Mount Isa on Marian Street both sell unleaded at 237.5, a price they moved to on Sunday afternoon, less than two hours apart. Shell Reddy Express on Grace Street and the Reddy Express Truckport on the Barkly Highway are on 256.9, and EG Ampol last lodged 255.9. The Grace Street site is just under 500 metres from Astron.

How the price war played out

The gap makes more sense once you see what happened ten days earlier. Times below are Queensland time, from prices lodged with the state's reporting scheme, which requires servos to report a change within 30 minutes.

On Thursday 15 October, Solo cut from 252.5 to 245.5 at 6:31am. Astron had already dropped from 258.9 to 249.9 on the Tuesday, and it answered with 239.9 at 7:45am and 231.5 at 2:10pm. Solo went to 229.5 at 5:35pm. Astron replied with 227.5 at 6:55pm, Solo with 226.5 at 9:00pm, and Astron with 225.9 at 6:10am on Friday. That's seven cuts in under 24 hours, with the title of cheapest servo in town changing hands six times.

Think of it this way. When two sellers offer an identical product, each can win every price sensitive customer by going a cent under the other. Economists call this Bertrand competition, and in theory it keeps going until the price reaches cost. Neither seller can stop on its own without handing those customers back.

Why it stopped

The key factor here is that a servo can't sell below what its fuel cost for very long. At 7:46am on Friday, Solo lifted to 237.5, then to 249.5 at 2:00pm. Astron followed an hour later, but only to 229.9, and it held that price for almost six days while Solo sat 19.6 cents higher. From Thursday 22 October the two crept back towards each other (Astron 239.9, then Solo 239.5 on Friday and Astron 239.5 on Saturday) before meeting at 237.5 on Sunday.

The cuts weren't driven by costs. Between 13 and 16 October the Townsville median eased just 1 cent, from 241.9 to 240.9, while Astron fell 33 cents.

Why the majors stayed out

Reddy Express and EG Ampol didn't join in. In fact, both Reddy Express sites lifted 1 cent to 256.9 on Monday 19 October, three days after the price war ended.

The reason is that not every customer shops on price. Loyalty discounts, fleet cards, a convenient highway site for trucks or simple habit all make some drivers less responsive to a cheaper sign down the road. Economists describe this as less elastic demand. If a major had matched 225.9, it would have given up 30 cents on every litre sold to customers who were never going to leave, just to win back the drivers who always chase the lowest price. Holding the line can pay better, even if it costs some sales. That's why the law of one price held between Astron and Solo but not across the whole town.

Is it just freight?

Mount Isa sits about 900 kilometres west of Townsville, so it's natural to assume freight explains its higher prices. But freight costs roughly the same whichever sign is on the roof. Townsville's Liberty and United sites are on 234.5, only 3 cents under Mount Isa's two independents. Reddy Express sites in Townsville sit between 237.9 and 241.9, which puts the Mount Isa sites 15 to 19 cents higher under the same brand. Distance adds a few cents to the whole town, but it can't account for the gap between brands.

The same split shows up in diesel, which matters in a mining town. Astron and Solo are both on 263.5, against 281.9 at both Reddy Express sites. Astron is also the only Mount Isa servo listing E10, at 235.5.

What this means for motorists

At today's gap, filling a 50 litre tank at Astron or Solo rather than Reddy Express saves $9.70, and an 80 litre diesel tank saves $14.72. Our savings calculator can run the numbers for your own vehicle, and the Queensland page compares prices across the state.

This month the two independents answered each other within hours, so if either cuts again, the other may well follow the same day.