The national average petrol price rose for the first time in ten weeks. There has been a lot of discussion in the media and around the water cooler regarding the substantial lift in fuel petrol prices and if it is justified. Well firstly it is important to clarify that the lift in prices is only partially as a result of a mild rebound in global oil prices and more to do with the resumption of the discounting cycle. After virtually no cycle and sliding prices since late last year, the discounting cycle is back in full force. And as such petrol prices across Australian capital cities surged by as much as 20 cents a litre late last week. Once again motorists will need to keep a close eye on petrol signboards to get a gauge of the low points in the fuel cycle.
What is clear is that petrol price has bottomed and now lifting. Not only has the Singapore unleaded price lifted in the past couple of weeks, but the Aussie dollar continues to depreciate – creating a double whammy effect on lifting petrol prices. The Singapore unleaded price is now holding at the highest levels for this year, up almost 25 per cent in the past three weeks, while the wholesale (terminal gate) price has lifted by almost 8 cent a litre in the past week – which should filter through to pump prices later next week.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
