David Nankervis, 20 January 2016

PETROL prices have been pumped up by around 10c a litre because multinational companies have tripled their refinery margins, according to the RAA.

This “very elevated’’ refinery margin has meant bowser prices were not falling at the same rate as oil costs, which have crashed in the past 12 months, RAA senior analyst Chris West said.

South Australia imports its petrol from interstate and overseas and the huge increase in refinery margins was helping boost multinational companies’ profits, Mr West said.

This time last year, the refinery margin to produce a barrel of petrol was around $US6 a barrel. Now it is between $US18 and $US20 a barrel, according to Mr West.

While Adelaide drivers were paying an average 104c/l for unleaded petrol yesterday, Mr West said the price would be in the “mid 90 cents range’’ if refinery costs hadn’t increased so dramatically.

He said people have been “scratching their heads’’, asking why petrol prices haven’t fallen further as the cost of a barrel of oil has dropped to its lowest level since 2003.

“Pump prices were below a $1/l this time last year but oil prices were higher,’’ Mr West said. “The fact refinery margins are elevated is why petrol is not getting as low as before.’’

Mr West said “it was about time’’ retail prices reflected falling oil costs. This included the cost of diesel.

“The diesel price should be lower than it is — while it’s selling for 110c/l, it should be heading towards $1/l’’ Mr West said.

He added that LPG should retail for around 10 cents a litre less than its current average price of 74c/l.

And regional fuel retailers should also be passing on cheaper petrol wholesale costs, he said. “Some country prices are not responding, while many are lagging behind,’’ Mr West said.

He urged motorists “to fill up now’’ and take advantage of the price cycle. Prices were as low as 99.9c/l yesterday, which made Adelaide the cheapest among the capital cities, the RAA’s website said.

Extracted in full from the Adelaide Advertiser.