If you’ve been keeping track of global oil prices and the whole OPEC argument, then driving past Australian petrol stations, seeing the bowser price at around $1.35 and going “huh?!”, you’re not alone.
AMP’s Shane Oliver put together this chart to give the oil companies a serve, arguing prices should be around 20% lower at $1.10.
— Shane Oliver (@ShaneOliverAMP) March 23, 2015
Caltex Australia bit back almost immediately, saying that Australian prices are “benchmarked on Singapore MOPS95 (petrol). Tapis (crude oil) is of limited relevance to Australia.”
“The terminal gate price (currently about $1.19) is more relevant,” Caltex said, pointing to CommSec’s analysis, which details a 2.3% drop in the Singapore petrol price last week, in Australian dollar terms. CommSec says that will lead to “mildly cheaper” fuel about a fortnight from now. The price is now $93.25 a barrel.
But the most interesting point in the CommSec analysis by economic Savanth Sebastian that they the key driver in pump prices is actually the discounting cycle.
There are two aspects worth noting: the cycle runs over a much longer time frame than you think (it’s not weekly) and each city runs on different one.
Here’s what Sebastian says about it:
Figures from MotorMouth show that petrol prices have spiked and are currently at their peak in Sydney, Melbourne and Brisbane. While Adelaide prices peaked about a week ago and have eased marginally in the past few days. Interestingly Canberra and Hobart prices seem to be holding relatively steady while Perth has its own price cycle, having peaked a couple of days ago.
Figures from MotorMouth show that the discounting cycle is currently at the highpoint in Sydney, Melbourne and Brisbane. In Adelaide prices have hit the high point a week ago and have started to ease marginally but Canberra and Hobart petrol prices remained relatively stable.
And here’s the chart showing how they work.
CommSec’s message to motorists on the eastern seaboard is hang off filling the tank, not because of anything to do with the Aussie dollar or oil prices, but because the discounting cycle should head south soon.
The Australian Institute of Petroleum says national average price rose last week by 0.4 cents to $130.1 per litre.
CommSec says Aussie dollar movement will influence prices more in coming months, with the fall in the dollar over the last nine months clawing back another 12 cents a litre in savings from motorists.
Meanwhile, both the Singapore gasoline price and domestic wholesale price rose 17 to 20 cents a litre, and, on average, Australian prices went up by the same.
But Oliver was undeterred in his battle with Caltex, having the last word on who might be winning on what motorists are spending at the pump.
@CaltexAustralia Of course not. You can see occasional deviations in the chart.Sounds like its refiner margins that have increased globally!
— Shane Oliver (@ShaneOliverAMP) March 24, 2015
But there’s one major downward trend in oil: jobs. Today Woodside Petroleum announced it was cutting another 300 jobs in response to falling prices.
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