Fuel prices hit record highs, eclipse $2 per litre
By Sourced Externally
October 26, 2021
The price of regular unleaded is at an all-time high across the country as travel restrictions ease, and experts say there’s no peak in sight.
Petrol prices are at record highs and tipped to go higher in the lead-up to Christmas, as Australia prepares to return to the road for life after lockdown.
The Australian national average price for regular unleaded hit 169.5 cents per litre on Sunday, well above the previous high watermark of 158.9cpl set during the Global Financial Crisis, according to Australian Institute of Petroleum data.
Price monitoring site motormouth.com.au reports that Melbourne’s average price today is 169.8 cents per litre (cpl), down slightly from last Wednesday’s high of 173.9cpl. Some petrol stations, such as BP Laverton, are charging motorists 181.9cpl to fill up.
In Sydney, motormouth reports an average price of 172cpl, but many stations are charging up to 181.9cpl for regular unleaded. In Brisbane, prices are even higher. BP Windsor is charging 185.9cpl, well above the city’s average of 175.8cpl.
In 2021, the national average price has increased 44 per cent, which equates to an extra $900 a year for the average family car, based on 14,500km travelled and 8L/100km usage. If you drive further or use more fuel your bill will be even higher.
Financial traders in America and Europe are predicting that the price of crude oil will continue to rise from current highs of around $86 a barrel, possibly exceeding $US200 a barrel by the end of 2022.
While the crude oil price is not the sole factor in pump prices, it does have a major influence. If crude oil prices continue to rise, petrol prices will be forced to follow, say the experts.
If this happens, Australian motorists could see prices for regular unleaded petrol close to $2 by Christmas and possibly even $3 in late-2022, adding approximately $3000 a year to the two-car family’s fuel bill.
“This will be tough for Australians to take”, the NRMA’s Peter Khoury told NCA Newswire recently.
“It’s terrible and it will get worse,” he said. “Unfortunately we are genuinely concerned that the worst is yet to come and, as you go across the country, [prices] in all of the capital cities are heating up.
“It’s particularly challenging for families coming out of lockdown,” he said. “You finally get to get in the car, head out and drive around and unfortunately what we’ve come into [are] these dramatically rising prices.”
Petrol prices are more than double the most recent low of 82cpl in April 2020, which Mr Khoury said was due to the initial impact of Coronavirus on our vehicle usage.
“You had a situation where demand for oil plummeted and we started to see record low prices.
“Well, now we’ve got the counter to that; oil prices are increasing consistently as the world opens up and gets more vaccinated [and] demand increases significantly.”
David Byrne, the Associate Professor of Economics at Melbourne University, agrees. Speaking to Drivein late-September, Mr Byrne said: “As with many sources of volatility we’re seeing in the economy, it’s the pandemic.”
“In March 2020, world oil prices collapsed with the collapse of world oil demand, and disagreements between Saudi Arabia and Russia over how to manage oil prices through their cartel-like arrangement added to the oil collapse.
“As Northern Hemisphere economies recovered through 2020 and 2021 with vaccines and opening up, oil demand began to rise again with cities once again having movement, and airline travel rebounding.
Byrne expects prices to fall in the near term as slowdowns brought on by the Northern Hemisphere winter and the spread of the Delta strain take effect.
His view is in contrast to American and European stock market traders who are betting that the price of crude oil will continue to climb this year and next.
The Wall Street Journal reports that US futures traders are betting that the US crude oil benchmark, known as West Texas Intermediate (WTI), will surge above $US100 a barrel as early as December.
WTI is at $82 a barrel, up 70 per cent year to date, and has not been over $100 since the oil crash of 2014.
In Europe, the wagers are even more bullish, with market data provider QuickStrike reporting futures activity up to $200 a barrel for Brent crude – the global crude oil benchmark.
Brent crude currently sits at $US86 a barrel, more than double the $US38.26 it was in October 2020.
The Wall Street Journal says that futures traders are gambling that supply chain disruptions and regional shortages will keep pushing energy markets higher despite the slowing rate of global economic growth.
In the past, Brent crude prices have been as high as $120 a barrel in March 2012 as Iran responded to EU sanctions by stopping oil trade with England, France and other EU countries.