Petrol prices are 20c a litre higher than they should be given the fall in crude oil prices, according to AMP chief economist Shane Oliver.

The average price was around $1.30 a litre on Monday, when it should be around $1.10 a litre, Mr Oliver said.

The inflated pump price has added about $14 to the cost of filling a typical family sedan, he said.

Mr Oliver has analysed the price of crude oil and pump prices since 2000 and seen a major disparity in recent weeks.

“Based on the normal relationship between the level of the Asian Tapis oil price in Australian dollars and average Australian petrol prices, petrol prices should be running around $1.10 a litre right now,’’ he said.

“When oil prices fell earlier this year competition pushed pump prices to around $1 a litre but now it seems competition is out of the market.

“You can’t justify current pump prices given the price of Tapis oil and the value of the Australian dollar.’’

Mr Oliver said Tapis oil prices — which are the benchmark for Australian petrol prices — have fallen from around $US64 a barrel to US$55 a barrel since February but the savings were not being passed on at the pump.

He said refineries were making little money when prices were around $1 a litre in January but now “have gone from one extreme to another’’.

“I hope an independent retailer will see an opportunity to import cheaper fuel and push prices down,’’ he said.

“Remember world oil prices are still 50 per cent down on what they were a year ago but $1.30 a litre is not much off the high point pump prices were at back then.’’

RAA senior analyst Chris West said refining profit margins had risen and Adelaide’s pump prices had been at the higher end of the price cycle for longer than usual during the past couple of price cycles.

“Back in January refineries were making no money off a barrel of oil but now they are making $19 a barrel … which adds 12c to the pump price,’’ Mr West said.

“Our petrol prices are falling and I would expect them to keep falling to around the wholesale price (of $1.18).’’

Mr West expects prices will keep falling in the lead up to and during the Easter holidays as part of the typical price cycle.

“We will be keeping an eye on these prices,’’ he said.

Extracted in full from News.com.au

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