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Highlights
- Australia has witnessed an increase in petrol prices.
- The increase in international refined petrol prices have pushed domestic retail petrol prices up.
Annual average retail petrol figures were lowest in 22 years in 5 major cities in Australia Sydney, Melbourne, Brisbane, Adelaide and Perth In 2020-21,. However, the June quarter has seen increase in petrol prices.
Despite lockdowns in Australia, petrol prices in Australia have increased to the highest levels in 20 months. The average price of petrol is around 154 cents in the previous week.
ACCC’s report dated 14 September 2021 reveals elevated international refined petrol prices pushed average retail petrol prices up in the June 2021 quarter. When compared to the March 2021 quarter figures, average retail petrol prices increased by 8.6 cents per litre to 142.0 cents per litre in the five largest cities in June 2021.
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Why are petrol prices moving up in Australia?
The rise in price has been attributed to the movement in international refined petrol prices. The major changes in crude oil prices in 2020 were because of the deals made by the OPEC cartel & other crude oil-producing nations to reduce the production of crude oil and the impact on demand of petrol due to the COVID-19.
Further, OPEC production cuts and rising global demand meant crude oil prices continued to rise in March 2021. The OPEC cartel was denying ~ 8 million barrels a day in March 2021. In April 2021, OPEC and non-OPEC nations slightly increased output by 0.35 million barrels a day in May 2021 and June 2021 and 0.4 million barrels a day in July 2021. However, due to the recovery in demand and falling stockpiles in the US, crude oil prices increased in the June quarter 2021.
ALSO READ: Petrol Price Dropped in June Quarter but Gross Margins Stood at Record Highs In June Quarter
A Peak into Australian Fuel Market
In Australia, domestic fuel prices are linked to international prices. Domestic prices of petrol are linked to relevant international prices. The Singapore benchmark price of petrol is considered the primary price benchmark for petrol in Australia. The Singapore benchmark price coupled with shipping cost and Australian taxes decides the wholesale price of petrol. Average petrol prices this week ended 12 September 2021 was 154.2 cents, and average petrol wholesale price was 136.8 cents.
The Singapore standard price of diesel (Gasoil 10ppm sulfur) is the major diesel price benchmark for Australia. The Gasoil price plus the shipping charges plus the Australian taxes represents the overall wholesale price of the diesel. There is no retail discounting cycle for diesel. Only 25% of diesel are put up for sale via retail outlets. Most of this goes to contract or fuel card customers instead of the private motorist. On a long-term agreement, most diesel is sold in bulk to customers from the mining, transport, and farming space.
Bottom Line
Increased fuel prices have a direct impact on the overall economy. A steep increase in fuel prices results in higher inflation, resulting in increased prices for basic goods, thus affecting households. With pandemic still looming over the head, and OPEC oscillating the petrol supply at international level, the oil prices are expected to be on the move till 2021 end.
