“High prices are definitely starting to bite into our budgets, with companies like myself, we’re always on the road so we’re driving all over [the city], petrol is a big overhead,” Mr Kristian Milosevski told Fairfax Media as he was filling up his car on Tuesday.

Petrol prices have risen sharply this month close to 10-year highs. The most expensive regular unleaded petrol in Sydney on Tuesday was $1.68 per litre and in Melbourne $1.70 a litre. Whereas petrol retailers like Caltex and BP were buying their petrol from suppliers for $1.40 a litre.

“Annualised national prices have increased 22 per cent over the year to September 23,” Commsec senior economist Ryan Felsman said.

“With prices at this level, it is effectively a tax on consumers. If the average Australian fills up with 40 litres a week this is costing them $254 a month.

“We think the new normal for petrol prices will be around $1.50 a litre.”

Mr Milosevski said the high petrol prices were forcing him to rethink how he operates.

“The prices, as they go up, make it more convenient to start looking at electric cars like a Tesla as it is now more value for money,” he said.

The rise in prices are being boosted by high retailer margins, which are now 50 per cent above the 16 year average. Coles Express, which has the largest single share of the retail petrol market, was named recently by the Australian Competition and Consumer Commission as the country’s most expensive retailer.

Geoff Trotter, the head of petrol price analysis firm Fueltrac, said while there had been an increase in the price of oil, retailer margins were out of control

“There has been an increase in volatility in the oil price and decline in the exchange rate which has helped drive this,” he said, but “the weekly fuel price cycles are completely confected”.

“These petrol prices and fuel cycles are just fake and a contrivance of retailers. It’s almost like a lottery and if you’re late in the cycle then bad luck.”

Caltex was approached for comment.

The Australian Bureau of Statistics said in 2015-16, transport costs accounted for around 15 per cent of the average weekly household’s budget, although this figure is likely to increase.

Consumers are being hit by the rising oil price which has been heading upwards since late last year when oil cartel OPEC and Russia began reducing their production levels in order to increase prices. US President Donald Trump’s decision to place sanctions on Iran’s oil has pushed it higher.

The price of Brent crude oil spiked on Tuesday to reach $US81.48 a barrel, the highest price it has seen since December 2014, and petrol prices are racing ahead.

Energy economist Anas Alhajii told Fairfax Media the world is headed for a potential oil shortage with prices to rise above $US100 a barrel.

“Oil demand has been underestimated and it will be way higher than forecast by the International Energy Agency,” Mr Alhajii said.

“We can expect to see demand rising and oil hit much more than $US100 per barrel again. Australia has a serious problem as it is rich in every energy source except for oil, so it has to import it.

“We’re heading for a major energy crunch,” he said.

Extracted from Canberra Times