Here's why petrol prices look set to fall in Australia

Photo by Scott Barbour/Getty Images

Crude oil prices have weakened and the Australian dollar is stronger, and that’s good news for Australian motorists, says Commsec’s chief economist Craig James.

He thinks that petrol prices are going lower.

“The double whammy of a firmer Australian dollar and lower global crude prices will put extra spending power in motorist pockets,” James said.

“Since the recent highs in January, the Singapore gasoline price has fallen by 9.5 cents a litre in Australian dollar terms.”

Given that movement, and the fact the average national pump price has only fallen by 3.5 cents per litre over the same period, James says that further declines of between 5-7 cents per litre are likely in the fortnight ahead.

According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol rose by 3.5 cents to 130.6 cents a litre in the past week.

Source: Commsec

For more cost-sensitive consumers, James also notes that petrol price cycle in Australia’s southern and eastern capitals is now far longer in duration than what was the case in the past.

“The petrol discounting cycle — from highs to lows — in southern and eastern capital cities has stretched to over a month,” he says.

“Petrol prices now stay at the lows for a short period and then can lift 20 cents a litre in the space of 3-4 days before starting the downtrend again.”

James says that the last price cycle in Melbourne lasted 53 days, and only slightly shorter in Sydney.

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