A recovery in demand and some Covid-linked supply snafus have pushed oil prices back to about $US75-80 a barrel of late, depending on your blend of crude.
That’s a bit shy of double the average price in 2020, so you’d expect to see some added cost flow on at the bowser.
Supply issues are key too. Opec regularly meets to set production levels among its cartel members, and overnight the US and other nations agreed to coordinate the release of some of their strategic oil reserves in a bid to force crude prices lower.
Filling up with local costs
On top of the shipping costs to get it here, the government applies an excise fee of 43 cents a litre, indexed twice yearly.
That’s a flat tax that all road users pay (unless you’re a mining company, or an electric vehicle owner – more on the latter later).
The cost of transport for an average metropolitan household has now climbed above $400 a week for the first time, the AAA said this week. The $401.86 tally was up as much as $58 a week compared with 2020.
For those in Sydney, for instance, the cost was $477.56 a week, while Wagga Wagga somehow managed to keep their household transport bill to $309.41.
The wonder of Wagga, though, hints at a flaw in the “it’s just the free market (plus taxes) at work” response to what steers petrol prices one way or the other.
The ACCC has launched numerous investigations into petrol prices over the years. It lists a range of influences, including changes in the value of the Australian dollar against the greenback (in which all major commodities are priced).
The results, though, suggest something else is at play or otherwise price trends would move more in lockstep than they do.
An ACCC spokesperson said “like many markets, the degree of competition varies according to location, and some locations have more competitive markets than others”.
“Competition is influenced by a number of factors including the size of the market, the location of the market, the number and type of businesses in a market, and the pricing strategies of the businesses,” the official said. “The degree of competition changes over time.”
Not sure, though, that explains those city-by-city shifts, nor what gives in Wagga.
Going the extra mile
Petrol and other fuels are unusual because the seller is required by law to make the prices public.
That alone triggers unusual behaviour among consumers that doesn’t happen with, say, asparagus, where prices are harder to compare according to Richard Denniss, head of economics at The Australia Institute.
Denniss, himself a former “petroleum transfer engineer” (AKA servo employee) in his youth, says it wasn’t uncommon to see a driver drop a U-turn across double lines, braving fines, to save one cent a litre by not filling up at a service station across the road.
“They’d save 40 cents and then pay $10 for bottled water,” he says.