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Petrol price falls below $1.50 a litre

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Published on: Monday, May 26, 2014

by Savanth Sebastian

Weekly petrol prices

Petrol price fall: According to the Australian Institute of Petroleum, the national average Australian price of petrol fell by 0.7 cents per litre to 149.5 cents a litre in the week to May 25 – only the second time in six months that the national average price has fallen below $1.50 a litre.

Petrol prices troughed midway through last week across the Eastern Seaboard (the low point in the cycle). Prices have since drifted higher and are likely to hit the high point in the cycle over the coming days.

Today, the national average wholesale (terminal gate) unleaded petrol price stands at 143.0 c/l, up around 1.6 cents over the week.

The petrol figures have implications for retailers, especially petrol marketing groups.

What does it all mean?

The good news for motorists is that the national average fuel price fell below $1.50 a litre last week, marking only the second time in the past six months that petrol has been below the pivotal price. The slide in the national price was largely due to the discounting cycle. In Sydney, Melbourne, Brisbane and Adelaide, petrol prices hit the low point mid-way through last week. In fact the discounting cycle over the past fortnight seemed to be more drawn out, taking about 15 days rather than the standard 11-13 days. Prices are now drifting higher with the peak in the cycle likely to be in the next couple of days.

The best guide to underlying petrol prices is the Perth market which has a distinct weekly cycle where prices hit lows on a Wednesday and spike higher the next day. Over the past five months, Perth prices have barely budged from 151-155 cents a litre. In contrast the average weekly petrol price has swung through an 15-17 cent range in just the past three weeks across Sydney, Brisbane and Melbourne.

While petrol prices in all Australian capital cities and regions should follow similar trends and track movements in global prices, unfortunately they rarely do. The volatility in petrol prices across capital cities doesn’t appear to be helping anyone, just confusing motorists and making life difficult for retailers.

Global oil prices are edging higher, reflecting geo-political tensions across Europe and the Middle East. For Aussie motorists, there is little relief from historically-high underlying petrol prices in the near term. As is always the case, shopping around pays dividends.

What do the figures show?

Petrol prices

According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 0.7 cents a litre to 149.5 c/l in the week to May 25. The metropolitan price fell by 0.8 c/l to 147.0 c/l, while the regional average price fell by 0.7 cents per litre to 154.5 c/l.

Average unleaded petrol prices across states and territories over the past week were: Sydney (down 1.4 cents to 144.4 c/l), Melbourne (down 2.3 cents to 142.4 c/l), Brisbane (down 4.3 cents to 147.7 c/l), Adelaide (up by 12.4 cents to 153.2 c/l), Perth (down by 0.1 cents to 151.6 c/l), Darwin (unchanged at 173.0 c/l), Canberra (unchanged at 157.3 c/l) and Hobart (up 0.1 cents to 160.6 c/l).

Today, the national average wholesale (terminal gate) unleaded petrol price stands at 143.0 c/l, up around 1.6 cents over the week.

Last week the key Singapore gasoline price rose by US$1.10 to US$123.50 a barrel.

In Australian dollar terms the Singapore gasoline price rose by $3.06 or 2.3 per cent last week to $133.70 a barrel or 84.09 cents a litre.

Figures from MotorMouth show that petrol prices in Sydney, Melbourne, Brisbane, Adelaide and Perth troughed midway through last week (the low point in the cycle). Prices have drifted higher and are likely to hit the high points in the retrospective cycles over the coming days.

What is the importance of the economic data?

Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory's metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.

What are the implications for interest rates and investors?

In major capital cities petrol prices are poised to jump to historically high levels over the next couple of days, meaning that consumers will retain conservative spending habits. Petrol is the single biggest weekly purchase for most families.

The ongoing political commentary from the fall-out of the Federal Budget including the lift in fuel excise will dominate sentiment in the near term. Retailers are already under pressure with the warmer weather depressing winter clothing sales and they will need to continue near-term discounting and keep prices low in the lead up to end of the financial year.


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