- The cost of unleaded petrol in Australia hit the highest level in over a decade last week, lifting to 160.5 cents per litre.
- The increase partially reflects that average retail margins jumped to the highest level on record.
- Wholesale petrol prices have fallen sharply in recent weeks, suggesting similar moves should be seen at the bowser without any further increase in margins.
The cost of unleaded petrol in Australia hit the highest level in over a decade last week, lifting to 160.5 cents per litre, according to Commsec citing data from the Australian Institute of Petroleum.
Not since July 2008 has the cost been that high.
While continued declines in the Australian dollar and prior strength in global crude oil prices largely explains the recent spike in prices, there’s another factor that has largely gone unnoticed.
Average retail margins — the difference between wholesale prices and what you pay at the pump — has risen to the highest level on record based on calculations from Commsec.
“The gross retail margin stands at a record high of 19.8 cents per litre,” says Craig James, Chief Economist at Commsec, noting the average retail margin surged by 6 cents per litre alone last week.
“Wholesale domestic petrol prices have fallen sharply in a short space of time. To date, pump prices haven’t responded.”
James says the unusually large spike could reflect a multitude of factors, but stopped short of declaring outright profiteering from fuel retailers.
“It does take time for the cheaper fuel to arrive in Australia,” he says, referring to the fact that the vast majority of automotive fuel is sourced from southeast Asia.
“And it takes time for the dearer fuel in petrol station bunkers to be sold and be replaced by cheaper supplies, but after three weeks of declines for regional petrol prices, Australian motorists will want to see petrol signboards displaying lower prices in the coming week.”
Thankfully for motorists, the recent price trends suggest that’s likely to occur.
“The regional gasoline price has fallen 11 cents a litre from recent highs and Australia’s wholesale petrol price has fallen by 8.5 cents,” James says.
“So this is an indication about where the pump price is headed.”
While that may deliver some temporary relief for household budgets, a decline of that magnitude would still leave average prices above the levels seen just a few months ago.
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