Australian petrol prices plummeted last week, recording the largest drop in 10 months.
According to Commsec, citing data from the Australian Institute of Petroleum, the national average pump price of unleaded petrol fell by 4.5 cents to 123.5 cents a litre, leaving it at the lowest level in seven months.
The declines were spread across the country, falling by 5.8 cents to 121.5 cents per litre in metropolitan centres, while regional prices fell by a smaller 1.6 cents to 127.7 cents per litre.
Price drops were recorded across all of Australia’s eight capital cities with Sydney, Brisbane and Adelaide all logging declines of more than seven cents per litre.
With some stations in Sydney and Adelaide selling regular unleaded at around 103 to 104 cents per litre, according to analysis from Motormouth, that implies that some operators are currently selling petrol for a loss given the wholesale cost is currently around 107 cents per litre.
The national average Australian price for diesel petrol fell by a smaller 0.5 cents to 127.4 cents per litre over the week.
Craig James, chief economist at Commsec, says that recent declines have been driven by plunging crude oil prices.
“OPEC oil nations are trying to support the price of crude oil near US$50 a barrel by restraining production, but the efforts are being thwarted by higher US production,” he wrote on Monday.
“At present though crude oil prices are falling due to over-supplied production, thus benefiting consumers.”
OPEC’s pain is the Australian consumers gain, in other words, with James estimating that motorists are currently saving around $8-9 a month from the cost of filling their cars up compared to the highs seen a month or so ago.
While not a huge amount, it all adds up. And, given wholesale prices have fallen more than pump prices in recent weeks, James suggests even lower petrol prices may arrive in the weeks ahead.
“The wholesale price in Australia, also known as the terminal gate price, is at 7-month lows, down by 9 cents a litre in the past month,” he says.
“Pump prices have only fallen 7 cents a litre so far from recent highs, so prices have scope to ease a little further, especially in Canberra, Darwin and Hobart.”
Shane Oliver, chief economist at AMP Capital, agrees with that sentiment, suggesting that if oil prices are hold around current levels the retail price of petrol could fall towards $1.10 a litre.
Both James and Oliver suggest that should help to boost consumer sentiment and, as a by product, potentially Australia’s retail sector as well.