Motorists should expect to see greater relief at the petrol pump in the weeks ahead as weaker international oil prices start to flow into domestic petrol prices.
Wholesale fuel prices around Australia have eased in recent weeks, headlined by a 12 per cent drop in prices in Sydney over the past month, with continued falls in key overseas oil prices signalling more softening to come.
The Australian Consumer & Competition Commission will be watching the response of Australian petrol retailers closely, following its pledge earlier this year to continue its scrutiny of the sector.
The ACCC in January vowed to produce eight reviews into petrol prices over the course of this year after expressing concern at the industry’s slow reaction to falls in international oil prices.
The ACCC’s frequent investigations into the Australian petrol market over the past decade have found that there is generally a two-week lag between movements in key international oil and fuel markets and local bowser prices.
Key international oil prices have fallen by 35 per cent since June to their lowest levels in six years on signs that a global oversupply will persist, and the typical two-week lag in pricing means consumers should start to see the benefits of this week’s oil price weakness early next month.
Caltex Australia spokesman Sam Collyer told The Australian that while petrol and diesel prices were not specifically tied to crude oil prices, they did broadly follow over time, given crude oil is the single biggest cost for refiners.
“We do know, though, that supply and demand for international refined products (such as petrol and diesel) fluctuate independently of the crude price and, indeed, each other,” Mr Collyer said.
“This simply reflects the fact these products are internationally traded and that there are times when one or both are in more or less supply, or more or less demand, than the historic norm.”
The fall in global oil and Singapore petrol prices is starting to become visible at service stations across Sydney.
The average fuel price in Sydney has dropped to $1.22 a litre but could fall below $1.20 a litre, a spokesman from National Roads & Motorists’ Association said.
Only a week ago, it had predicted a low point of $1.25, which had already been surpassed.
“It just highlights how volatile the market is,” he said.
The fall in international oil prices is, however, being partially offset by the ongoing weakness in the Australian dollar. Every 1c lost against the US dollar was equivalent to about 0.9c of a litre of fuel, the NRMA spokesman said, reflecting how vulnerable Australia was to global factors.
The ACCC’s 2014 investigation into petrol confirmed that prices had closely tracked international refined petrol prices over the past 15 years.
In the decade to last year, the average unleaded fuel price in Australian capitals increased by 125 per cent while the benchmark Singapore petrol price increased 130 per cent.
The 2014 study also estimated that the retail profit on petrol was about 2.22c per litre.
Extracted in full from: theaustralian.com.au