Australia's consumer watchdog has demanded that fuel companies slash the cost of petrol within a week, saying they have failed to lower pump prices as world oil prices fall.

A leading motoring organisation welcomed the call, accusing oil companies of "ripping off" motorists as oil prices fluctuated wildly, but the fuel companies denied the charge.

As crude oil prices hit an almost two-year low, Australian Competition and Consumer Commission (ACCC) chief Graeme Samuel said a survey of 3,000 fuel stations had revealed a price aberration when global benchmarks were applied.

"At the present time we're seeing a variation occur, we're seeing the Singapore price falling but the Australian retail price not falling consistently with it," Samuel told Seven Network television.

Unless prices fell within a week, some "fairly hard" questions would be asked of the oil companies, he warned.

"I think what we can do is ask hard questions of them and expose some of the answers out into the public arena," he told the Australian Broadcasting Corporation.

But the watchdog ruled out a call for government regulation of petrol prices, saying such a move would ultimately hurt motorists.

"You do some significant disadvantage to motorists if you say to the government, 'Step in to regulate prices'," Samuel said.

"The moment we set a price at that level then companies price up to that level and we don't get discounts, there's no reason for it ... we want to see competition push prices down as low as possible," he added.

National Road and Motorists' Association president Alan Evans welcomed the watchdog's move, saying consumers have been paying high prices for petrol for too long.

"We believe that it's quite a clear message from Graeme Samuel, the head of the ACCC, that oil companies' days of ripping motorists off might be numbered," he told the ABC.

"We've been campaigning for two years to get the ACCC to take action -- we welcome this intervention.

"Motorists have been ripped off by the oil companies quite substantially over the last couple of years and it's about time they were called to account," Evans added.

British Petroleum (BP) told the ABC it was willing to discuss the ACCC's concerns, while rival Shell said its wholesale fuel prices were in line with current world oil pricing.