Motorists driving over Christmas should fill up their tanks next week to make the most of falling petrol prices, according to a leading economist.
In good news for drivers crossing reopened state borders, the national average petrol price fell 5.1 cents per litre to $1.62 last week – the largest fall since the depths of the pandemic 15 months ago.
But experts said the lowest petrol prices will not arrive until next week – before a major price spike in the run up to New Year’s Eve.
CommSec senior economist Ryan Felsman says global oil prices are rising, which will put upwards pressure on Australian bowsers within the next two to three weeks.
And although local pricing cycles are forcing petrol stations to cut prices right now, the market will bottom out over the next two weeks and prices will begin rising again – just in time for New Year’s Eve.
This points to a brief reprieve for motorists in the run up to Christmas, before another bowser squeeze in late December and early January.
“The rebound in international fuel costs is bad news for Aussie motorists ahead of summer driving holidays,” Mr Felsman said.
Christmas sweet spot
The Christmas reprieve is quite something, though.
Petrol prices hit a three-month low in Melbourne on Monday ($1.48 a litre) and a two-month low in Brisbane ($1.55), according to data from fuel comparison service MotorMouth.
Prices in Sydney have also started easing after peaking on December 6. They averaged $1.76 per litre on Monday – down from $1.83 last week.
But the low prices won’t last long.
Australia’s largest cities follow a petrol price cycle that pushes prices up and down in a regular pattern.
The cycles are not an exact science, but the signs are pointing towards a hike in bowser prices around Christmas that carries on into New Year’s Eve.
That means there’s going to be a sweet spot for motorists looking to fill up over the next week or so, Mr Felsman said.
“Drivers should hold off filling up their tanks until next week with cheaper prices likely before Christmas,” he said.
But don’t wait too long. Prices will rise soon, and not just because of the local market cycles.
Oil prices rebounding
Besides local market cycles, the other major factor changing bowser prices for Australian motorists is global oil prices.
On that front, the news is much less positive.
After falling on the back of Omicron concerns earlier this month, global oil prices are rebounding.
The Singapore gasoline price – a benchmark for the Australian market – rose by $7.31 last week (6.3 per cent), the largest rise in nine weeks.
The wholesale price paid for that fuel by suppliers in Australia is already going up too, increasing three cents to $1.44 per litre on Monday.
That’s only a small rise, but it’s a sign of what’s to come.
It usually takes two or three weeks for changes in global oil prices to flow through to bowsers in Australia.
And based on that timeline, the effect of higher oil prices will begin to squeeze motorists around the same time that the local price cycle begins to peak again.
So, motorists who fill up over the next week or two will be better off than those who wait too long.
And if you’re planning a holiday in January, it’s best to fill up the tank before Christmas to keep a lid on your costs.
Extracted in full from: Petrol prices: The best time to fill up this Christmas (thenewdaily.com.au)