According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 6.3 cents to 113.7 cents per litre in the week to January 24 – the biggest weekly fall since November 30 2008… But the sharp 9-10 per cent lift in crude oil prices on Friday may suggest that further downside at the petrol pump is limited…
The petrol price slumped last week but many are still asking why it isn’t lower? In large part it gets down to a weaker currency. A year ago the Aussie dollar was near US81-82 cents. Today the Aussie is near US69-70c. The Singapore gasoline price is around similar levels in US dollar terms, but it is higher than a year ago in local terms due to a weaker currency.
The gross retail margin (gap between the pump price and terminal gate price) has trended higher over time. But the gap is only around 3-4 cents a litre higher than a year ago, so this explains only a small part about what is going on with the pump price.
However the motorists that would feel aggrieved at present are those that need to fill up with diesel. The terminal gate price averaged 90.2 cents last week whereas average pump prices are 119.4 cents a litre – a gap of 29.2 cents a litre. By contrast, the gross retail margin for unleaded petrol last week was just over 10 cents a litre…
Australian families are saving on average just over $35 a month in filling up the car with petrol compared with July last year…
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.
