Jessica Hinchliffe, 19 January 2016

Queenslanders may pay less than $1 per litre at the bowser this month as global oil prices continue drop.

The RACQ believes some service stations may offer prices as low as 99.9 cents a litre.

For the first time since 2003 oil prices have dropped to $US28 a barrel, with many drivers hoping to see the flow-on effect for petrol prices.

Michael Roth, executive manager of public policy at RACQ, said prices would vary from service station to service station.

“When it gets close to the $1 mark there could be a few service stations that go for 99.9 cents a litre as a marketing gimmick,” he told 612 ABC Brisbane’s Emma Griffiths.

“We do see sometimes in the price cycle that cheap service stations will offer petrol at wholesale price and it will get close to $1 or just below.”

Mr Roth said the wholesale price would make it hard for all retailers to offer fuel for below $1 per litre.

“We’re unlikely to see petrol below $1 as an average, as the wholesale price is still sitting above 105 cents a litre and they would be selling at a loss,” he said.

“At the moment, if people are looking at unleaded petrol, they should look at around 120 cents or below, but if you can hold off prices will continue to go down definitely below 110 [cents].”

The fuel breakdown

Mr Roth said despite oil prices dropping, the Commonwealth fuel excise could keep fuel prices above the dollar mark.

“The fuel excise sits at 39.2 cents plus 10 per cent GST on top of that and 50 cents goes to federal government,” he said.

“That’s why even with fuel down to $US28 a barrel, that’s about $40 in Australia, that still only leaves 50 cents for the whole oil refining and retail network.”

He said a weak Australian dollar did not always reflect a reduction in fuel prices.

“The Australian dollar acts like a buffer on oil prices, as it moves in the same direction as oil,” Mr Roth said.

“When oil is cheap the Australian dollar is also cheap internationally.

“This is because the commodities that are tied to the Australian dollar like iron ore and coal move in the same direction.

“It also means that petrol prices don’t go up as fast in Australia as they do overseas but it means they don’t drop down quite as far.”

Extracted in full from ABC News.