Jordan Marshall, 12 January 2016

CRUDE oil prices might be at a 12-year low, but Melbourne motorists should not expect to pay any less at the petrol bowser. The price of oil dropped below $US32 a barrel overnight — the first time since 2003.

That same year Victorians were paying an average of just 89 cents a litre for unleaded petrol, according to the Australian Institute of Petroleum.

A stronger US dollar and concerns over Chinese demand caused the latest drop in price, which marked a 15 per cent slide since the beginning of the year.

Motorists needed to be aware the relationship between the price of crude oil and the cost of petrol at the bowser was not linear, according to Caltex Australia’s Sam Collyer.

“While a drop in the crude oil price does reduce the running costs of refineries it does not guarantee a drop in petrol prices,” Mr Collyer said.

“The price of crude oil and that of petrol are dictated by different markets and different levels of supply and demand for the products.”

The Singapore benchmark price of petrol (MOP S95), which cost an average of $47 a barrel last week, and the strength of the Australian dollar were the main indicator for the price of petrol in Australia.

“Changes in the MOP S95 price are what will flow through to motorists, but history shows us there is always a bit of a lag with any changes that occur,” Mr Collyer said.

RACV vehicle engineering manager Michael Case agreed the drop in the price of crude oil did not guarantee lower prices at the bowser.

“There’s not a direct relationship between the cost of crude oil and that of petrol in Australia,” Mr Case said. “Any change we are to see in the price of petrol won’t be apparent until the end of this petrol cycle. When prices peak in a week or 10 days we can compare that with the last high point to see if there is any real reduction to the price of fuel.”

Bargain hunters should head to National Lube Carlton, where unleaded petrol was just 107.9 cents a litre, the cheapest across Melbourne.

Around the city drivers were paying 115.5 cents a litre in Balwyn and Heidelberg West, 114.9 cents a litre in Footscray, 110.9 cents a litre in Craigieburn and 116.9 cents a litre in Cheltenham.

Extracted in full from the Herald Sun.