Petrol prices in Australia could be about to fall

Dan Istitene/Getty Images
  • The average cost of unleaded petrol spiked last week to around 150 cents a litre, driven by a sharp increase in metropolitan markets.
  • The increase coincided with the end of discounting cycles in many east coast markets, and coincided with the conclusion of school holidays in many parts of Australia.
  • Wholesale unleaded petrol prices have fallen to the lowest levels in close to three months, pointing to declines in pump prices in the weeks ahead.

Australian petrol prices have risen to eye-watering levels in recent months, driven higher by a combination of soaring crude prices and weakness in the Australian dollar.

According to Australian Institute of Petroleum, the national average price of unleaded petrol jumped 5.1 cents to 149.6 cents a litre last week, coinciding with an end to price discounting during the busy school holiday period.

The average metropolitan price surged by 6.7 cents to 149.2 cents per litre, far larger than the average 1.5 cent lift in regional prices to 150.4 cents per litre.

For stretched household budgets, this is undoubtedly unwelcome news for motorists. However, good news may be on the way.

According to Commsec, thanks to recent weakness in global crude prices, wholesale petrol prices now sit near the lowest levels in three months, pointing to the likelihood of declines in pump prices in the weeks ahead.

Commsec

“Today, the national average wholesale unleaded petrol price stands at 131.8 cents a litre, down by 2.5 cents over the week,” says Craig James, Chief Economist at Commsec.

“From the highs, the drop in the wholesale price is currently around 8 cents a litre, potentially providing savings of around $5 to fill up a petrol tank with fuel.”

James estimates that should retail prices move in line with wholesale costs, this could see average pump prices sit closer to 130 cents a litre rather than 150 cents a litre today.

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